Asian rubber prices remained steady in thin trade on Monday, supported by tight raw material supply following rain over the weekend in major producing countries and a rise in Tokyo futures, traders said.
But supplies from Thailand, Malaysia and Indonesia were expected to rise next month on favourable dry weather, putting downward pressure on rubber prices, they said.
"A supportive factor this week could be rain over the weekend. This could disturb tapping for this week," said a dealer in Thailand's southern town of Hat Yai.
"But after the rain is gone, we expect supplies next month will be improved." In the physical side, he said the market was quiet in trade as people awaited some activity for direction.
On Monday, offers to sell Thailand's STR20 grade for shipment in December and January were unchanged at $1.58 per kg, while Thai RSS3 rubber sheet was flat at $1.58, he said.
The price of benchmark unsmoked rubber sheet grade 3, or USS3, the raw material for export-grade rubber, was steady at 59-60 baht ($1.43-$1.45) a kg, he said.
A Singapore trader said Indonesia's tyre-grade SIR20 was barely changed at $1.55 per kg for shipment in December, while Malaysia's tyre-grade SMR20 was also flat at $1.58 a kg for shipment in January.
"I keep hearing rain plenty of rain up in Thailand and a lot of rain in Malaysia," he said.
He said most people, including Indonesian shippers, believe the market would fall slightly in coming weeks because of an expected pick-up in production.
Prices on the Tokyo Commodity Exchange, the trend-setter for global rubber prices, ranged between 0.7 yen and 1.9 yen per kg higher, with the benchmark April 2006 rubber contract up 1.7 yen at 193.5 yen.
"Most trade was position-squaring before the spot contract expiry on Thursday," said a trader with a futures brokerage firm in Tokyo. However, firmer crude oil prices lent support to the rubber market, he said. US crude oil for January rose 44 cents per barrel to $57.65 on Monday, supported by colder weather in the United States, despite assurance that Opec would not consider cutting output unless prices fall further.
Rubber often benefits from high crude oil prices because more expensive oil causes a shift to natural rubber from synthetic rubber, a petroleum product, traders said.