A slide in regional rubber futures led to few physical deals in Asia this week as sellers opted to hold on to their material rather than chase falling prices. Rubber futures in Singapore dropped to six-week lows and those in Tokyo fell to their weakest since January. Both prices are down for the year, reflecting sustained pressure from excess supplies and slow demand particularly from top buyer China.
"At current prices, exporters are finding it tough to sell because buyers are buying low," said a trader in Singapore. "The bearish sentiment continues to hold."
There are trades of physical rubber cargoes at prices close to Singapore futures, or SICOM, he said, but added that overall demand remained weak.
SICOM rubber for May delivery fell to as low as 135 US cents per kilogram on Thursday, a level last seen on February 23. A further decline would bring the price to levels last seen in 2009.
Malaysian tyre-grade SMR20 rubber traded at $1.41 per kilogram, while Indonesian SIR20 was sold at $1.41-$1.42 per kg, traders said.
Buyers in Indonesia were seeking prices of around $1.39-1/2 per kg for SIR20, but shippers were only willing to go as low as $1.41, said a trader in Jakarta.
"Producers cannot follow the downward movement in prices at the moment and they prefer to wait rather than sell," he said.
Costs have been rising for producers due to the wintering season, when output of latex - the raw material for rubber - drops as trees shed leaves. The wintering period in major producers usually lasts from February to April.
Some buyers were turning to Vietnam where exporters can sell material lower than SICOM prices, said the Indonesian trader.
"Vietnam's rubber is cheaper and the quality is more or less the same as Malaysia and Indonesia," he said.
Vietnam is the world's third-biggest producer of natural rubber after Thailand and Indonesia.
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