Deal activity picked up this week in the physical rubber markets as a dip in prices after recent sharp gains attracted back buyers, with global tyre makers snapping up Indonesian grade. The Tokyo Commodity Exchange rubber contract has lost 0.3 percent this week after jumping 10 percent last week. Front-month SICOM rubber has lost about 3 percent on the week after six straight weeks of gains. It fell to a one-week low of 158.80 US cents per kg on Friday, after hitting a nine-month peak of 166 US cents last week.
"Buying interest picked up this week because of lower prices," said a trader in Jakarta. "But producers are still waiting for higher levels. They are insisting on $1.64-$1.65, sometimes even higher." Goodyear bought the Indonesian SIR20 grade for July shipment at $1.62 per kg, traders said. Sumitomo Rubber Industries bought rubber for August shipment at $1.62-1/2 per kg.
The RSS3 grade changed hands at $1.87 per kg for July shipment. Despite the recent uptick in prices, raw material costs continue to worry rubber producers. Prices of the raw material in Indonesia have gone up to 18,600-18,800 rupiah ($1.40- $1.42) per kg this week, from 18,000 rupiah last week, traders said. Raw material supply has dipped due to the wintering season, when latex output drops. Output has been particularly tight in Medan, the provincial capital of North Sumatra.
In Thailand, buyers were seeking the STR20 grade at $1.63 per kg, although producers were still holding out for better prices of $1.65-$1.72, traders said. "The drop in prices attracted buyers though many are still waiting for a market correction," said a Thai trader. Thai prices have been supported recently by the presence of Chinese buyers, which alleviated some fears of slowing demand from the top consumer. A monthly report from SICOM this week noted "growing interest in deliveries from North Asia traders".
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