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Asia Rubber-Supply tight, buyers eye Thai sellers

SINGAPORE: Asian rubber supply has tightened further in part due to rains, with all eyes now on Thai sellers who might offer remaining stocks ahead of the Lunar New Year celebration later this week, traders said on Monday.

"They (Thai farmers) may sell some this week if they really have more raw materials," said a trader. "We have the New Year at the end of the week. They need money."

Traders said some sellers, particularly in Thailand, were believed to be holding back their stocks in hopes for further price increases ahead of the wintering in February.

Rains have hampered tapping in Thailand, Indonesia as well as Malaysia, reducing raw material supply before the start of the wintering in February that usually cuts the flow of latex, they said.

"There was no peak production ahead of the wintering," said another trader. "Now, everybody is looking up (for prices). There might be a downward correction but not much."

Traders said Thai for May was offered at around 75 US Thai was seen last traded at 72-73 cents a kilo. Indonesian stood at 33 cents per pound for March.

LEWIS & PEAT TROUBLES SPUR DEMAND

In addition to tight raw material supply, the collapse of a leading international trader Lewis & Peat earlier this month had led some major users to buy rubber for prompt shipments, adding to upward price pressure, they said.

"Over the past few weeks, major buyers were buying large quantities and shipping it out," said a third trader.

He said such consumers could not wait until details were worked out for deals related to the trading company. Some traders said the withdrawal of Lewis & Peat, with an annual turnover of some 300,000 tonnes, had also accelerated a shift among buyers towards Thailand from Indonesia, where the company had a strong business base.

Indonesia's PT Bakrie Sumatera Plantation owns 75 percent in Lewis & Peat (Rubber) Ltd's operation in Singapore, which has gone into receivership along with its British unit. Its US unit has filed for Chapter 11 bankruptcy protection.

"Things seem to be even more difficult in Indonesia," said a third trader. "Production has been low. And people are worried about the unrest in northern Sumatra. Shipments may get delayed."

Asked about China, which traders said last week cut import duties to 12 percent from 25 percent, the second trader said: "They've been quiet as rubber prices have gone up. But they should come back for more."

Traders were sceptical over a report last Monday that the Thai government still had rubber stockpiles of some 200,000 tonnes after selling about 50,000 tonnes in calendar 1999.

"I'm not sure if they really have so much. Maybe it's just a figure on their book," said a third trader. "I don't understand either why they want to release such figures. Don't they want prices to go up?" The second trader agreed, saying: "If they did and came into the market now, they could sell without problems. Shippers would buy it, also for raw materials for STR."-Reuters