* SIR20 done at 85.00 to 85.25 cents/lb FOB
* STR20 offered at $1.93/kg, CIF China
* Price weak despite wintering
By Lewa Pardomuan
SINGAPORE, March 4 (Reuters) – A few tyre grade cargoes changed hands for nearby shipments this week but some consumers could be waiting for bargains as prices held near multi-year lows despite tight supply, dealers said on Tuesday.
The dry wintering season is underway in Thailand, Indonesia and Malaysia, which account for about 70 percent of global natural rubber output, causing leaves to fall and curbing the flow of latex.
But the seasonal event has done little to stir up the benchmark Tokyo Commodity Exchange (TOCOM), while physical prices on the Singapore Commodity Exchange are still near their weakest level in five years.
Indonesian and Thai grades changed hands at around $1.87 to about $2.00 a kg in a series of deals late on Monday.
“It looks like the current movements are driven by a rise in oil prices. It has nothing to do with the tight supply,” said a dealer from Medan, the provincial capital of North Sumatra, referring to recent gains on Tokyo rubber futures.
“Haze is blanketing the northern part of Sumatra and has prevented sunlight from reaching the trees. It’s dark here in Medan.”
The haze, blamed on forest fires in Riau province in the southern part of the main rubber growing island of Sumatra, has yet to disrupt transport or trading activities.
Indonesia’s SIR20 rubber was sold to trading houses at 85.00 to 85.25 U.S. cents a pound for April delivery, down sharply from 89.75 to 90.00 U.S. two weeks ago, which suggested that a rebound in Tokyo failed to support physical prices.
The most active August contract on TOCOM added 1.5 yen kg to 226.2 yen due to a sharp jump in oil prices and a weaker yen on Tuesday. It tumbled to 18-month lows in early February on concerns over demand from top consumer China.
Thai STR20 grade was offered at $1.93 a kg including freight to China, but there were no reports of deals. Offers stood at $2.00 without freight, down slightly from $2.05 a kg traded two weeks ago.
Another Thai grade, RSS3, changed hands at $2.18 a kg, down sharply from $2.21 to $2.22 last week.
“The weather has been drier and wintering has started. But then again, this is seasonal. The price of STR20 at $2 a kg seems to be too high for some buyers,” said a dealer in Thailand. “It’s not attractive.”
Malaysia’s SMR20 was offered at $1.90 a kg, down from traded prices of $2.08 two weeks ago.
WEEK AHEAD
Worries about slowing demand from China are likely to weigh on prices next week. China’s factory activity shrank again in February as output and new orders fell, a private survey found on Monday, reinforcing concerns of a slowdown in the world’s second largest economy. (Editing by Anupama Dwivedi)
Source: Reuters
