Gains in international rubber futures have encouraged buying in Indonesian SIR20 rubber after lean demand last week, and traders said prices were likely to rise on expectations of limited supply in top producer Thailand.
They said the stronger buying interest had helped August tyre-grade SIR20 to inch higher to 53.5 cents/lb on Tuesday, or $1.19 a kilogram, free-on-board Padding/Plumbing, against 52.5 cents/lb a week.
The September contract firmed to 53.75 cents/lb, FOB Begawan/Surabaya. "Buyers are coming back to check prices, and some are making their bids this week. But they are still trying to press for bargain prices," one trader in the Sumatra city of Padding said.
The price gap between buyers and sellers stood at around 1/4 cent per lb, and the deals clinched this week were for small quantities.
"Goodyear and Singapore dealers bought around a hundred tonnes each, mostly for October shipment, at around 53.75 cents/lb," another Padding trader said.
"But I haven't heard China entering the market yet." Traders said they expected prices to edge higher this week although profit taking on global markets may limit gains.
"This Tokyo firmed slightly, but it looks like it will close lower than yesterday on profit-taking," one Jakarta trader said.
The benchmark November rubber contract on the Tokyo Commodity Exchange (TOCOM) slipped to 153.7 yen per kg, after closing up 0.3 yen per kg at 154.1 yen on Monday.
"One of the factors that may help prices back up is Thailand, but nobody can predict (the price movements)," the Jakarta trader said.
Heavy rains and violence in southern Thailand have boosted prices under recently launched Thai rubber futures, where ribbed smoked sheet number 3 (RSS3) is being traded.
The Thai market ended mixed on Tuesday, with the most-active December contract closing at 53.7 baht per kg, down a touch from 53.8 baht on Monday.
Thailand's Muslim-dominated south, the country's key rubber producing region, has been gripped by violence since January and many rubber tappers are afraid to work.
In Indonesia, supplies remain tight in the growing belt of southern Sumatra, where raw material prices were offered at 9,700 rupiah ($1.03) a kilogram, virtually unchanged from the previous week.
Traders said supplies there were expected to return to normal in August, when the dry wintering season that usually disrupts the flow of latex would shift to the northern part of Sumatra Island.
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