Asia Rubber: Supply keeps pressure on prices, buyers take small amounts
Thursday, 16 January 2014 00:00
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REUTERS: An unseasonal supply surplus at a time of a poor outlook for demand kept pressure on Asian physical rubber prices, while trading was thin as buyers wait to buy on dips, traders said.
Supply, which normally drops sharply from December to February as the dry weather reduces rubber latex, stayed intact as traders began hoarding rubber late last year, traders said.
“They began hoarding as they expected to capitalise in profit in the dry season, when prices should get higher,” said a trader at Thailand’s rubber trading centre of Hat Yai.
“But things went wrong as demand was not very good.”
Traders said physical prices were slightly changed in line with Tokyo Commodity futures prices, which set the global trend, and poor economic data implied a poor demand outlook.
The price of benchmark TOCOM rubber moved in a tight range of 250 to 260 yen last week as poor economic data in China and the US held down prices.
“Demand was not very strong, especially from major rubber consumers China and the United States, and that kept pressure on physical rubber prices,” said a Malaysian trader.
Growth in China’s services industries slowed in December, a pair of surveys showed, mirroring a slowdown in manufacturing and confirming views that the world’s second-largest economy lost steam at the end of last year.
The pace of growth in the US services sector slowed for a second straight month in December with business activity expanding at a lower rate and new orders contracting.
While major tyre makers continued to buy rubber, the size of their purchases were too small to push up prices, traders said.
Bridgestone Corp bought Thai RSS3 at $ 2.35 per kg for February shipment, while Chinese tyre makers sought Indonesia SIR20 at $ 0.98 per kg, traders said.
