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Asia rubber: Indonesia leads mkt lower,stocks weigh

SINGAPORE: Indonesian rubber suppliers are leading prices downwards in the absence of major buyers, while INRO stocks, seen to have few quality problems after recent inspections, are weighing on sentiment, traders said on Monday.

"We know there's plenty of rubber nearby," said a trader.

"SIR20 is the cheapest rubber you can buy. SIR boys missed sales. They are undersold."

Traders said prices for Indonesian SIR20 were still under downward pressure, although they should be near the bottom of around 28 cents as the wintering had begun in northern Sumatra.

It was last traded at 28 U.S. cents/lb for April shipments, compared with around 29.50 cents for May a week ago.

They said Thai RSS3 was offered between 64 and 66 U.S. cents per kg for April, while buyers were reluctant to pay the prices.

"Buyers are looking to lower prices," said another trader. "There's not much raw materials (in Thailand). Yet more to the point, there are no buyers. I heard there was a gap as large as six cents between bids and offers."

Traders said major tyre makers seemed to have covered most of their needs for the next few months and had been largely absent from the market since the Lunar New Year in February.

Some traders said tyre makers might have shifted more towards signing long-term contracts with suppliers, instead of purchasing in the spot market, after the collapse of Lewis & Peat, one of the top rubber dealers.

They found little solace in a slight recovery in TOCOM rubber futures late last week.

Traders said International Natural Rubber Association (INRO) stocks also weighed on the market, particularly as it became clear they were of reasonable quality after inspections in Medan and Bangkok earlier this month.

"That rubber is in very good condition," said the first trader, who added his colleagues went to see the warehouses.

"Now people know there is plenty of rubber in good condition."

Traders said INRO would be unlikely to sell its stocks at current price levels, but it had made no secret of its intention for destocking above its cost price, seen at 68-69 U.S. cents per kg.-Reuters