Southeast Asian rubber prices are expected to remain soft this week with foreign buyers largely out of the market and demand at a low ebb, traders said on Monday. In Malaysia, dealers forecast prices would fall by an average of three to five cents per kg for each grade. "All overseas buyers seem sidelined at the moment," one dealer said. "We haven't got anything from the Middle East,China, US or Europe."
At the close on Friday, the Malaysian Rubber Exchange and Licensing Board quoted the July RSS1 buyer price at 263.50 Malaysian cents ($1.04) a kg and the July SMR 20 buyer price at 245.50 cents. Compared with the previous Friday, RSS1 was down 12.50 cents while SMR20 fell 8.0 cents.
Indonesian traders said they expect offer prices for benchmark tyre-grade SIR20 to soften this week amid generally bearish market sentiment. "In general, we are still trying to compete with Thailand and Malaysia, which are offering lower prices. We expect prices to fall again next week because of this situation," one said.
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Traders said SIR20 finished the week at 45.25 US cents/lb FOB Medan for October shipment and at 45.00 FOB Medan for September shipment.
In Palembang, traders offered SIR20 at 44.75 for September/October shipment, while offer prices were quoted at 45.00 FOB Surabaya and at 44.00-44.25 FOB Pontianak and Jambi.
Traders in Bangkok said Thai rubber prices had slipped further amid poor demand. A Thai government official denied market talk that it might have started releasing its stocks into the market.
The rumours had been putting pressure on prices. "It is not our intention to sell when the prices are still on a downtrend. Otherwise, what is the point of intervening in the first place," said a senior agriculture ministry official. The official told Reuters the government would continue its purchases from local producers at least until the end of July. He declined to say how much had been bought since the intervention scheme began in May, but industry sources estimated the purchases at between 15,000-20,000 tonnes.
Industry sources were lukewarm to the government's attempt to support the market and did not expect any radical improvement in the situation.Some Indonesian traders said supplies of raw material were still tight in a number of centres, but this was not impacting on prices.
"Buyers usually do not care when we say that supply is tight. They can always choose from which centre they want to purchase rubber. If, for instance, traders in Palembang do not want to sell, buyers can contact those in Medan," one said. "I don't think buyers are going to come in this week or prices are going to strengthen much, even on technicals," said a Malaysian trader. "All in all, we might see a fall of three to five cents through the week," he added.
A check with Malaysian trading houses before Friday's close showed the SMR 20 being offered at 245 Malaysian cents a kg,
SMR 10 at 246, SMR CV at 313, SMR L at 292 and drum latex at 214.
Traders said stocks of latex and other materials were still plentiful in the Malaysian market, although scattered tropical showers in the past week had slightly restrained rubbing tapping. (Reuter)