20000215

Asia rubber: INRO caps upside as wintering begins

SINGAPORE: Asian physical rubber prices are likely to remain steady in the near future as INRO's possible stock sales counters upward pressure from the starting wintering season, traders said on Monday.

"The market may just hold on (to these levels)," said a trader. "It depends on how fast INRO can work, if INRO really wants to sell the stock. It often takes too long to do the job."

The International Natural Rubber Organisation (INRO) said on Friday that it might start selling part of its 140,000-tonne rubber stock if prices continued to rise. Southeast Asian physical rubber prices have staged a small rally since January, partly due to raw materials shortage triggered by rains and farmers holding back supply.

A surge in the Tokyo futures market early in February gave another boost to exporters and farmers who had raised their offers as the wintering began in parts of Thailand.

Traders said RSS3 was offered at around 78 US cents per kilo for April shipments, while Indonesian SIR20 was bid at 33- US cents per lb for March shipments.

Yet, there were hardly any buyers because many were well covered for nearby requirements and they were reluctant to chase prices up, they said.

"I guess the consumers have been away from the market for about two weeks. It's a cat and mouse game: who holds longer?," said the trader.

Traders said raw material supply in Thailand was tight, with prices seen close to 25 cents per kilo. The wintering had begun earlier than usual, though some expected the season to be shorter because of moist weather recently.

While INRO buffer stock manager Arch Roberts told Reuters the market needed to go to about 75 cents for INRO to be able to sell, some traders said INRO might sell at around 71 cents, slightly above its cost price of 69 cents as of mid-October.

Traders said TOCOM rubber futures were likely to remain in a range, with the July contract hovering between 88 yen and 93 yen, despite a retreat on Monday due to profit-taking.

"Everybody wants to take profit after last week's rally. That was a bit over the top," said another trader. "I see the next support at around 88.1. I dont't expect it (the benchmark July) to break out of the recent range."-Reuters