SINGAPORE (Dow Jones)--Asian rubber settled higher Thursday as recent moves by the Thai government and industry
players gave a leg up to prices, which fell sharply in March from record high levels in February mainly due to external
factors.
Benchmark August natural rubber futures on the Tokyo Commodity Exchange gained as much as 8.1% before settling 7.6%
higher at Y396.9 a kilogram.
Thai Deputy Prime Minister Suthep Thaugsuban said Monday the government will keep local USS3 rubber prices at
THB120/kg or more and that exporters will be asked to suspend shipments.
Traders are taking the statement as a cue to stockpile and to not try to push prices down, a trader in southern
Thailand said. "It's not that difficult to do that now anyway as it's the low-production season."
Thai unsmoked sheet 3-grade breached the THB120/kg set by the government at the central market auctions, giving
further support to Tocom rubber. USS3 arrivals at central markets fell to 3.5 metric tons Thursday at the central
markets--down from 122.5 tons Monday.
Suthep said there will be another official meeting Monday to discuss the export halt, the Bangkok Post reported
Wednesday.
Leaders of the Rubber Growers Cooperative Federation of Thailand will meet Prime Minister Abhisit Vejjajiva next week
to ask the government to intervene in the issue of falling rubber prices, the Bangkok Post reported Thursday.
The Thai government, through the International Rubber Consortium, has asked Indonesia and Malaysia to maintain prices
as well, International Rubber Consortium acting Chief Executive Yium Tavarolit said Thursday.
August Tocom rubber closed Y12.2 or 3.1% higher at Y409.1/kg in the night session, which is considered part of the
next day's trading.
Natural rubber on the Shanghai Futures Exchange settled 1.9% higher at CNY34,255/ton on bargain-hunting. Orient
Securities Futures analyst Lin Hui tipped nearby resistance at CNY35,000/ton on chart-based cues.
Ribbed smoked sheet 3-grade on the Singapore Commodity Exchange settled at 500 U.S. cents/kg, while technically
specified rubber 20-grade also settled sharply higher. Singapore-based dealers said there might have been some
short-covering going on.
Physical rubber prices were higher, in line with the price recovering on the futures markets.
Some big Thai exporters weren't offering, citing low raw material availability, uncertainty over price volatility amid
large price swings, and recent government announcements.
Exporting firms also got increasingly uncertain about entering into new deals given government calls for an export
halt.
"If we don't export, then what do we do? We are both producer and exporter," said an executive at a major exporter.
Some Malaysian producers were also not offering; "that should be the way; some China buyers are trying to back out of
deals done at higher prices earlier, they want to buy at the lower prices now. So they (producers) don't offer and these
buyers have to fulfill their contracts," said a Singapore-based dealer.
A trader in Sumatra said he sold so much rubber after strong gains Wednesday that he has nothing to offer Thursday, as
raw material arrivals were low amid the low-production season. "I have to start collecting raw material again before I
can sell," said the trader in Medan.
The current tight supply in major natural rubber producing countries will help support prices, after the market
plunged from record high levels following the earthquake and tsunami in Japan, the Malaysian Rubber Board said Thursday.
Asian Rubber Futures
March 17 Change from
previous settlement
Tocom Aug RSS3 Y396.9/kg Up Y27.9
Shanghai Sep SCR5 CNY34,255/ton Up CNY645
Thai Oct RSS3 THB139.5/kg Up THB7
Sicom Apr RSS3 500 U.S. cents/kg Up 41.3 cents
Sicom Apr TSR20 486 U.S. cents/kg Up 52 cents
Physical prices in Asia, quoted in U.S. cents/kg, free on board:
Grade Shipment March 17 March 16
Bids Offers Bids Offers
RSS3 Apr/May - - - 460-465
STR20 Apr/May - - - 415-420
SIR20 Apr/May - 485-486 - 420-430
SMR20 Apr/May - 490 - 425
USS3 Mar THB120.09-THB121.38/kg THB102.37-THB103.55/kg
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