KUALA LUMPUR: Physical rubber deals were scarce this week with most Chinese players still away for the Lunar New Year holiday, and as rising costs of raw materials stalled buyers in other parts of the region from booking cargoes.
China, the world’s largest consumer, was shut from Feb. 18 to Feb. 24 for the festive celebration.
“China is still in holiday mood. They have enough stocks and finished goods on hand, they are in no rush to buy now,” said a Singapore-based trader.
Tiremakers purchased Thai RSS3 grade at around $1.81/kg for the March shipment and between $1.83/kg and $1.84-1/2 FOB April in Bangkok, traders said.
Interest for Thai STR 20 was muted as rising costs of raw materials lifted prices. Traders said buyers were not willing to pay for the grade that was quoted between $1.47/kg and as high as $1.52/kg this week.
“Buyers are looking for $1.40, but sellers are quoting $1.50 or more,” said a trader from the southern Thai city of Hat Yai.
The trader added that weather in parts of the country is now “hotter and drier than normal”, signalling an early start to the wintering season in the world’s top producer and exporter.
The reluctance to purchase cargoes was also seen in Indonesia, where wintering has already begun in key producing region North Sumatra. Wintering is a period when rubber trees become drier, resulting in lower yields.
The Indonesian tyre-grade rubber SIR20 exchanged hands at $1.42/kg, a Sumatran-based trader said, weaker than two weeks ago when prices were between $1.44 and $1.45-1/2 per kilogram.
The market is also awaiting a regional rubber meeting in Bandung on Thursday, that will be attended by Thailand, Malaysia and Indonesia – countries that form the International Rubber Consortium – along with officials from Cambodia, Laos, Myanmar and Vietnam.
The seven producers, which together make up 77 percent of the global natural rubber output, will discuss measures to shore up prices and help smallholders in the long term, a statement on the International Rubber Consortium website showed.
“It would be pleasant if there’s some surprise, or any measure that can excite the market,” said a second Thailand-based trader.
“But eventually, the prices will be dictated by market forces. At this moment the global economic conditions are not so rosy,” the second trader said.
Japanese rubber futures are down 1.5 percent this week, heading for their first drop in four, coming off from a 10-month high hit on Feb. 16.
– Reuters
