Asia rubber prices took on a firmer tone on Friday after several deals were done overnight and prices are likely to stay high in the next week with rains and festivals keeping a grip on supply.
Prices on the Tokyo Commodity Exchange, the global trend-setter for rubber, rebounded on Friday after falling on profit taking. The benchmark March 2006 rubber contract in Tokyo rose 0.7 yen per kg higher to 194.3 yen.
"Actually, there is demand, but buyers had been reluctant to buy until yesterday when the market dropped so much. So this is considered a bargain hunting," said one dealer in Singapore.
"They believed that was a good buy for them and they are right as this the Tokyo market rebounded. Thailand's tyre-grade rubber, STR20, sold at $1.66 per kg to a tyre-maker for January-March shipment.
Indonesia's block rubber was last traded at $1.60 to a dealer in Singapore for December-January shipment. Thai firms sold Thai 60-concentrated latex, Thai Hue and Thavorn to a Chinese buyer at $1,175 per tonne, including cost insurance and freight, for December shipment.
China, the world's largest consumer of rubber, was in the market this , seeking to buy for December. "Chinese buyers have been in the market this with some bought deals overnight but continue buying today," said one dealer.
Most sellers in Southeast Asia have already fully committed to selling forward contracts for November. "I think Indonesian boys are now offering prices for December and January," said one dealer referring to the world's second largest exporter of rubber.
SIR20 was also sold late on Thursday at $1.60 a kg free on board from Median in North Sumatra for December shipment, and at $1.59 a kg free on board from Plumbing in South Sumatra.
On Friday, Malaysia's tyre-grade SMR20 was unchanged at $1.63 for December to January shipment, while Indonesian SIR20 was steady at $1.60.
In Thailand, tyre-grade Standard Thai Rubber, or STR20 block, for December shipment was steady at $1.70 per kg, free on board.
Thailand's tyre-grade STR20 for shipment next January to March 2006 was $0.01 higher at $1.68 on Friday from Thursday's $1.67, as buyers were bidding at $1.66-1.67.
Dealers expect firm prices in the next week, backed by tight supply and good demand. "Looks like the market should be supported at this level," said one Singaporean dealer.
Less supply is expected in the Thai market in coming weeks because of the rainy season that began this month in the south, which produces around 90 percent of Thailand's natural rubber, and should continue until the end of November.