Thai rubber prices are expected to stay firm over the next week as continued tight supply of raw materials forces exporters to extend delays of shipments awaited eagerly by buyers, traders said on Monday. The price of benchmark unsmoked rubber sheet grade 3 (USS3), the raw material for export-grade rubber has risen 25 percent at almost 70 baht a kg over the past month.
One year ago, USS3 in Thailand, the world's biggest producer and exporter of natural rubber, was at 45 baht.
"Supply remains tight. The price is expected to stay high, backed by strong demand from exporters who still need to fulfill their export contracts," said one trader.
On Monday, the price of benchmark Thai RSS3 rubber sheet for August shipment was up $0.07 at $1.82 per kg, free-on-board (FOB), excluding freight costs, from a week earlier.
Tyre grade Standard Thai Rubber 20, or STR20 block, was up $0.1 at $1.65. Malaysia's SMR20 block was at $1.55, while Indonesia's SIR20 block was at $1.50.
The price of natural field latex, the raw material for Thai 60-percent concentrated latex, was up one baht at 61 baht from a week earlier.
Several exporters which had already delayed shipments by two months had told Japanese tyre markers and other overseas buyers that shipment would not begin until August, traders said.
"If exporters cannot deliver on those contracts, it will create more problems as those tyre makers will be caught in trouble," said one.
Most exporters said they were reluctant to make new offers for August onwards because of concerns about supply.
Thailand ships 90 percent of its output of 3 million tonnes to its key buyers Japan, China and the United Stated.
One of Vongbundit's processing plants caught fire in the southern province of Surat Thani early on Friday and around 1,000 tonnes of STR20 block rubber was thought to have been damaged, traders said.
The amount was considered small and the fire was not a factor in the 2 baht rise of the domestic price to 60 baht per kg over the past week due to already tight supply, they said.
Traders said buyers from China, the world's largest consumer of rubber, were desperate to buy for immediate delivery as its domestic stock was running low.
"Everybody is looking for rubber. Its stock is at very low level. They are trying to buy at whatever the price," said one dealer. "They are desperate. Everyone is asking for help for prompt shipment."
Traders said they were keeping a close eye on an insurgency in Muslim southern Thailand after militants told people in the rubber-producing province of Narathiwat to observe the Islamic holy day as a day of prayer, not work.
The order was issued in a leaflet distributed on Friday, said local people in the relatively impoverished province, where 80 percent of the 800,000 population rely on the rubber business.
Narathiwat, along with neighbouring Muslim majority provinces Yala and Pattani, has been afflicted by 19 months of violence in which more than 800 people have been killed. It normally produce around 600,000 tonnes of natural rubber a year.
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