BANGKOK, Nov 21 (Reuters) – Rubber prices, which have almost halved this year, should find support at $3.0 to $3.5 per kg over the medium term, helped by a seasonal fall in supply plus possible intervention by the Thai government, dealers and industry officials said on Monday.
The world’s top three rubber-producing countries, Thailand, Indonesia and Malaysia, said after a meeting in Bangkok on Saturday they did not see any immediate need for price intervention as they expected the rubber market to pick up soon for seasonal reasons. [ID:nL3E7MJ06D]
That meeting was held under the aegis of the International Tripartite Rubber Council (ITRC), which brings together senior government officials of the three countries.
The Indonesian Rubber Association (Gapkindo) said on Monday the ITRC would review the situation again in December, when it holds its annual meeting. [ID:nJ9E7HU02G]
Benchmark Thai smoked rubber sheet (RSS3) was offered at $3.40 per kg on Monday, down from $3.45 on Friday and only a little over half the record high of $6.40 hit in February.
In recent years, the exporting countries have tried to draw a line under the price at $3.0 per kg.
“Cooperation among exporters’ associations in the top three producers to refuse to sell rubber below $3.0 a kg is still going on. That’s why I’m confident that prices should not fall below that level,” Pongsak Kerdvongbundit, president of the Thai Rubber Association, told Reuters.
Pongsak said a promise by the Thai government to step in to keep the price of unsmoked rubber sheet (USS3) sold by farmers above 95 baht ($3.07) per kg would mean around $3.50 per kg for RSS3 for export.
“There is still a possibility that the producing nations will take unilateral action to support the market and that will stop a free-fall in prices,” said Naoki Asami, chief broker at Japanese trading house Kanetsu.
The Thai government’s support plan is to be submitted for cabinet approval on Tuesday. Ministers had been due to discuss it last Tuesday but the matter was deferred until after the ITRC meeting.[ID:nL3E7MB0UD]

MONSOON SUPPORT
Dealers said the export price should be supported by a seasonal fall in supply during the rainy season in Thailand’s south, the major rubber area, which produces around 90 percent of the country’s annual production of 3.0-3.2 million tonnes.
“The rainy season has already started and the rains have now disrupted tapping in the south,” said a trader in Hat Yai, the centre of Thailand’s rubber trade.
Dealers said Tokyo rubber futures, a big influence on the export price, should find strong psychological support at 250 yen a kg.
“It’s unlikely prices will fall below this year’s low of 250 yen unless we see a further deterioration in the European debt situation,” said Asami at Kanetsu, referring to the euro zone debt crisis, which has depressed markets for months.
The benchmark sixth-month rubber contract on the Tokyo Commodity Exchange fell 3.7 percent to a one-week low of 263.5 yen per kg on Monday, hurt by the absence of any measures from the Bangkok meeting.
($1 = 31.000 Thai Baht)

Source: Reuters

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