960404

Asian markets falling,

no bottom seen

SINGAPORE: Southeast Asian rubber markets, dampened by flagging consumer interest, could continue to retrace next week and traders said on Thursday they see no immediate bottom for prices yet.

"Prices will continue to be soft. There is not a bit of demand out there," said a trader at a large U.S. tyre firm in Singapore. "There is a lot of nearby rubber around and producers may start unloading rubber onto the market."

He expects Indonesia's benchmark SIR20 tyre-grade could gradually slip to 50-52 U.S. cents/lb in the coming weeks from 59-60 cents currently.

The sluggish U.S. rubber demand reflects high U.S. tyre inventories which have caused some tyre plants to cut back on operating hours.

"Our tyre inventories are the highest in the company's history. Our plants have stopped working on Saturdays and as such my rubber requirements are weakening."

"I could sit it out for three weeks and not buy a single pound of rubber," he said.

The demand scenario in Europe, China and Japan, the other three main rubber consuming regions, is also less constructive.

The Chinese are not buying rubber even though there are indications that China's demand is improving, traders said.

In Thailand, prices continued easing this week as wholesalers liquidated stocks held since before the wintering season, traders in the south of the country said.

Most buyers were from Japan with still no sign of Chinese buyers returning, they said.

"Prices declined further this week," one trader said. "We're still seeing the effect of the raw material situation which is improving every day."

Thai benchmark RSS-3 for May/June shipment eased to around US$1.40/kg FOB Bangkok on Thursday from $1.46/kg last Friday.

Prices were expected to continue easing next week:"The trend is still down," one trader said.

The wintering season is likely to begin ending soon but normal production is not expected to resume until late April.

Malaysian traders said it was difficult to predict if prices would gain next week as demand appeared to have really dried up.

"There will be a chance if China or some big buyer comes in with a large order," said a dealer. "For now, it only looks like another round of falls next week."

Another trader said there were rumours in the market on Wednesday that China was seeking about 1,000 tonnes of SMR20 "but even this did not boost sentiment".

Thailand Rubber Estate Organisation's tender on Wednesday for 4,000 tonnes of rubber in the open market also did not stir Thai interest because of a lack of available supply.

In Indonesia, prices are expected to move in a narrow range next week on the back of continued weak demand, dealers said.

"Wintering is likely to continue in Medan, causing a drop in supply, but prices are seen weak on continued poor U.S. demand," one dealer in the North Sumatran city of Medan said.

Another dealer in Medan said wintering in the North Sumatran region was likely to continue causing an estimated 40 percent drop in supply in the coming week.

Latex dealers said the market was likely to remain quiet despite expected short supply. Latex was expected to stay between 2,500 rupiah to 2,600 rupiah/kg, they said.-Reuter