BANGKOK: Chinese tyre-makers bought Indonesia grade rubber bolstering prices in thin physical trading in Southeast Asia on Wednesday, traders said, ahead of a week-long holiday in Thailand, the world's biggest rubber producer and exporter.
"Both buyers and sellers are now in holiday mood and the market is likely to be quiet for a few weeks until trading gets back to normal by late-April," said a rubber trader in Thailand' Hat Yai rubber centre.
Chinese tyre-makers bought Indonesia SIR20 block rubber at $1.65 per lb for prompt shipment, traders said, adding that the Thai RSS3 grade was sold at $3.92 per kg for June shipment.
"Chinese buyers keep buying rubber, mostly Indonesia's SIR20 grade, at current market prices," said Singapare-based dealer.
Trading in Thailand and Malaysia, the third biggest exporter, was slow on reduced supply as farmers stop tapping rubber during the dry season.
Farmers were due to resume tapping in late-April, when rubber trees rejuvenate and start producing latex again.
"However, it would take around a week for supply get back to normal due to producing process," said another Malaysian trader, adding that supply should rise significantly in May.
PRICES TO EASE
The prices of benchmark Thai smoked rubber sheet (RSS3), which was offered at $3.85 per kg on Wednesday, was expected to slip lower in May due to rising supply.
But, traders said th ey did not expect prices to fall significant as the government was expected to accelerate its buying scheme to support farmers.
The Thai government had approved 15 billion baht ($484.50 million) budget since January to buy un-smoked sheet (USS3) from farmers at 120 baht per kg to prop up prices. The buying is to be done through cooperatives.
But, there were only a few cooperatives that started buying and they could buy at only a few 170-200 tonnes of rubber so far, well below the target of 200,000 tonnes it aimed to buy earlier, due to complicated legislative process.
"Another reason was tight supply during the dry season. That's why we can buy very little rubber. However, we think we could buy more rubber to help support prices when supply rises in May," said Wit Pratuckjai, director general of the Office of the Rubber Replanting Aid Fund (ORRAF).