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Asia rubber: Firm on tight latex before wintering

SINGAPORE: Prices for physical rubber in Asia are set to move higher in the near future because of scarce raw material supply in the region ahead of the Lunar New Year and the wintering season, traders said on Monday.

"The intake of raw materials is lower than normal. It's about two thirds of normal levels," said one trader. "We worry that over the next one or two months raw material supply might get even tighter because of the Lunar New year and the wintering."

Traders said exporters were reluctant to sell because of hopes for higher prices amid rains hampering tapping in Thailand, Malaysia and Indonesia.

This came ahead of a slowdown expected during the Lunar New Year celebration in early February, followed by the wintering.

Some added shippers in Thailand in particular faced difficulties in getting enough raw materials after they had sold much for January to March shipments on forward contracts.

Prices for Thai were quoted at around 71.50 U.S. cents per kg for April, Indonesian at 32 cents per lb for March and Malaysian at 71 cents per kg for February, they said.

One trader cautioned: "Prices are unlikely to ease from here. Yet they might need something more to move upwards because we've got the psychological burden of inventories by INRO and governments. A cut in Chinese import duties might help."

Traders said there was still market talk that China might reduce import duties or come up with new quotas.

China, which usually imports 400,000-450,000 tonnes of natural rubber, has been an active buyer in the market since late last year, though enquiries have dried up of late due to a small recovery in the prices, they said.

"They've been buying more than one 12th of their annual imports so far this month," said the second trader. "They bought from Thai shippers who had quite a lot of RSS3 left unsold for near-by shipments."

Traders said some consumers might need to find a new supplier after a collapse of Lewis & Peat, a leading international rubber trading company with annual sales of more than 300,000 tonnes.

Some exporters in the region seemed to have been caught short, though they appear to have settled the issue, they said.

On Friday, Lewis & Peat Rubber L.P. in the United States confirmed that its U.S. unit had filed for Chapter 11 bankruptcy protection earlier this month.

An official at Ernst & Young in Singapore, which had been appointed administrative receiver for its unit here, has declined comment over the fate of the company.-Reuters