Lean demand is likely to steer Indonesian rubber prices downward in the coming days and traders said on Monday growing supplies from top producer Thailand may push prices lower.
They said September tyre-grade SIR20 had rebounded to 50.75 cents/lb, or $1.13 a kg, free-on-board (FOB) Begawan, on Monday from a week. October contract firmed to 51 cents/lb and traders said prices were likely to stay range-bound between 49 to 51 cents/lb, $1.09 to $1.13 a kg, FOB Begawan.
"Sellers prices are not too attractive and most of the producers won't tag along and automatically prices are restrained," one Padding trader said. Traders said tyre-makers Goodyear Tire & Rubber Co and Bridgestone Corp tend to offer nearly two percent lower than sellers' prices.
"It would definitely restrain any gains, but producers are not too quick to sell. I think it will stay in the range-bound area between 49 to 51 cents/lb," the Padding trader said. One trader from Jakarta said demand from American buyers was expected to dwindle due to the summer season there.
On the supply side, latex flows were still sluggish but trees were producing young leaves in the country's growing areas where the wintering season has ended. Wintering is when falling leaves disrupt the flow of latex.
Raw material prices eased to around 9,100 rupiah ($1) a kg after lingering at 9,800 rupiah in recent months in one of the key growing regions. In Plumbing and Padding they were offered above 8,000 rupiah per kg.
Indonesian Rubber Association executive director, Suharto Honggokusumo, told Reuters that 2004 natural rubber output from Indonesia, the world's second-largest rubber producer, was seen rising between five and six percent from 2003 production of 1.792 million tonnes.
"Significant growth is not yet seen. Overall, this year's projection would normally be higher, but we need to see weather inputs for the second semester," Honggokusumo said.
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