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Thai rubber exports are getting back to normal after a 2-1/2-week disruption caused by rail strikes, but trading remains subdued as high prices are keeping buyers on the sidelines, exporters said on Monday. Rail unions that had disrupted services in support of anti-government protests formally called off their action on Sunday.
"Everything is okay after the rail strike ended," said a Thai exporter at the Hat Yai rubber centre. Several thousand tonnes of rubber sheet and block rubber sold for September shipment were delayed by the strikes, which started on August 26, slowing down rubber movements in the south.
Thai exporters usually deliver rubber from factories in the south, the key rubber-growing area, by train, sending it to Malaysia where the cargo is loaded on to ships at Penang. Some switched deliveries to trucks because of the strike. "The rubber trade should get back to normal this week as using rail routes should help exporters in reducing logistics costs," one trader said. However, trading was not busy as most buyers were still on the sidelines, expecting prices to drop, traders said.
Scattered rain in the south had disrupted tapping, resulting in higher prices, traders said. Thai unsmoked sheet (USS3), the raw material for export-grade rubber sheet (RSS3), was quoted at 95 baht ($2.75) per kg, slightly higher than last week's 94 baht, they said.
"Prices should drop slightly if TOCOM prices slide in line with oil prices, but I don't expect to see a significant drop as we are still in the rainy season," one trader said. The wet season in the south usually runs until late October. The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for February delivery, which sets the global trend, settled at 302.4 yen ($2.84) per kg on Friday.
The Tokyo market was closed on Monday for a public holiday. Trading will resume on Tuesday and traders expected futures prices to fall in line with oil prices, which tumbled to a six-month low below $100 a barrel on Sunday. At 0419 GMT, US crude oil was at $99.16 a barrel. Weaker oil prices usually encourage tyre makers to shift to synthetic rubber, a petroleum product, from natural rubber, and that could trigger stop-loss selling on TOCOM.

Copyright Reuters, 2008

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