Thai rubber loses edge, Indo producers held on to offers

High premium Thai rubber failed to capture buyers' attention on Asian trade day, while Indonesian producers tried to hold on to their offers amid waning demand, sources said Helixtap on Monday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1840/mt FOB Belawan/Surabaya, down US$7.5, and African Rubber (AFR) 10 was at US$1810/mt CFR Rotterdam/Hamburg, down US$10, while Standard Thailand Rubber (STR) 20 was stable at US$1855/mt FOB Bangkok/Laem Chabang.

"The market is quiet. We are not too keen to sell as well," said a market source, adding reports of flooding in Thailand. Low buying expectation at the overseas market has prompted the Thai producers to sell domestically for better margins. According to market sources, the Thai producers are currently buying back and selling domestically. The offers were in the range of US$1880-US$1910/mt on FOB Bangkok/Laem Chabang for May to July shipments of STR 20.

The gap between STR 20 and SIR 20 is at US$15 as of February 28, 2022, while on average, STR 20 maintained a premium of around US$8 for February, according to Helixtap data.

The Indonesian producers tried to hold on to their offers, given Indo rubber's competitiveness in the market. However, some correction in the prices of the raw materials last week coupled with some slow down in demand weighed on the overall sentiment. Offers for March shipments of SIR 20 were at US$1840/mt FOB Belawan/Surabaya, while the buying interest for April and May shipment was in the range of US$1830- US$1840/mt FOB Belawan/Surabaya.

Buyers’ support prop Indo prices up

Spot rubber buyers drifted towards Indonesian rubber, lending some support to Indonesian processed rubber prices on Asian trade day despite some Indo raw material prices correction. Meanwhile, Thai producers tried to hold on to their owing to higher raw material costs amid waning demand; sources said Helixtap on Friday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1847.5/mt FOB Belawan/Surabaya, up US$2.5 on February 25, 2022, while Indonesian raw material was assessed at IDR 24,500/kg, down by IDR 500 over the week.

SIR 20 prices found some support from increased interest from buyers amid higher Thai rubber prices. A few trades were reported for April shipments of SIR 20 at US$1845/mt FOB Belawan/Surabaya and in the range of US$1845/mt FOB Palembang. According to market sources, Thai rubber has lost its competitive edge and now is being offered at a premium to Indo rubber.

Meanwhile, some correction in the raw material prices has given the Indo producers some room to adjust their offers to match the buyer’s expectations. The bids for April and May shipments of SIR 20 were in the range of US$1835-US$1850/mt FOB Belawan/Surabaya, while the offers were at US$1850/mt on FOB basis.

The market saw some slow down amid waning demand on the Thai front. The producers tried to hold on to the offers in the range of US$1880-US$1900/mt on FOB Bangkok/Laem Chabang for May to August shipments of STR 20.

The wintering kept the raw materials supply tight, however, limited capped any rise in the prices. “There are not many sellers in the market. Local (domestic) prices are higher, but not many sellers. Buyers are also not very keen as most of them are covered for their immediate requirements earlier when the prices were lower,” said a Thailand-based source.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1855/mt FOB Bangkok/Laem Chabang, down US$2.5 on February 25, 2022, while Latex Bulk at US$1650/mt FOB Bangkok/LCB and Thai raw materials at THB 53/kg, both stable over the week.

Meanwhile, the Asian market is showing a negative correlation to the Russia-Ukraine conflict, which kept the more or less active. However, the overall slowdown in demand impacted the African rubber prices as producers failed to attract buying interest despite lowering their offers. Helixtap assessed African Rubber (AFR) 10 was at US$1820/mt CFR Rotterdam/Hamburg, down US$30, on February 25, 2022.

Market assesses the invasion impact

Spot rubber market participants picked up a go-slow strategy amid escalating tensions between Russia and Ukraine as both buyers and sellers tried to assess the impact as Russia launched an invasion of Ukraine, sources said Helixtap on Thursday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1857.5/mt FOB Bangkok/Laem Chabang, up US$2.5 and Standard Indonesia Rubber (SIR) 20 at US$1845/mt FOB Belawan/Surabaya, up US$5, while African Rubber (AFR) 10 was assessed stable at US$1850/mt CFR Rotterdam/Hamburg on February 24, 2022.

“We have to monitor the situation. If there is a war, crude oil prices will shoot up due to disruptions, and that will affect tire prices, making them more expensive. Will that trickle down to rubber prices? Not too sure though (yet),” said a market source. The oil price has reached the $100 a barrel market for the first time since 2014, which is likely to have a broad effect on the commodities as a whole, given Europe’s reliance on Russia for energy. Moreover, the possibilities of supply and supply chain disruptions are also making the market skittish about the way forward.

In addition, the limited supply of raw materials in Thailand has kept the Thai producers away from the market. According to market sources, many producers are holding back from selling given the current raw material shortage due to early wintering. Offers for June and July shipments of STR 20 were around US$10/mt higher than the previous day and were in the range of US$1890-US$1900/mt on FOB Bangkok/Laem Chabang, with no buying interest at this level.

At the Indonesian front, the market remained largely quiet. “So far, the market is extremely quiet,” added another market source. However, given its competitive edge over Thai rubber, there were some bids while the producers raised their offers marginally amid limited offers from Thai producers. The bids for May and June shipments of SIR 20 were in the range of US$1840-US$1845/mt FOB Belawan/Surabaya, while the offers for May shipments were at US$1860/mt on FOB basis.

Thai rubber active on domestic demand, overseas offers limited  

Thai rubber producers shifted their attention to the domestic market for better margins given the recent spurt in domestic buying as market participants await the conclusion of the long-term contract with the Korean tire major, sources said Helixtap on Wednesday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1855/mt FOB Bangkok/Laem Chabang, African Rubber (AFR) 10 at US$1850/mt CFR Rotterdam/Hamburg and Standard Indonesia Rubber (SIR) 20 was assessed at US$1840/mt FOB Belawan/Surabaya, all unchanged from February 22, 2022.

As most traders await the conclusion of the Korean major’s long-term contract deal, there were limited Thai rubber offers for the overseas market. Moreover, the buyers hugged the side-lines awaiting some clarity in the prices, as per sources. “Some major tire companies regularly bought Thai rubber domestically on FOB basis and opted for Indo rubber for the overseas requirement, said a Thailand-based market source. STR saw more domestic trades lately, and they were primarily done directly by the producers, added a Singapore-based source.

Another possible reason for the shift in attention of the Thai producers towards the domestic market could be for better margins as low buying expectation from the overseas buyers amid soaring raw materials prices has squeezed the margins for some producers. The offers for June, July, and August shipments of STR 20 were in the range of US$1860-US$1890/mt on FOB Bangkok/Laem Chabang, with no buying interest at this level. Meanwhile, domestically the producers were able to sell in the range of US$1840-US$1870/mt on FOB basis, according to market sources.

Meanwhile, Indonesian prices saw some support amid limited offers for Thai rubber for the overseas market. The bids for May shipments of SIR 20 were slightly higher in the range of US$1840-US$1845/mt FOB Belawan/Surabaya. “Currently, STR is selling at a premium over SIR,” said a market source. According to Helixtap data, the STR 20 premium over SIR 20 hovered in the range of US$10-US$20 since mid-last week.

Thai sellers hold out, whilst waiting for Korean Tyre Manufacturers LTC

(22 Feb) Thai STR20 is still maintaining it’s premium over Indonesian rubber - a very different picture from 2021 and just a quarter ago. Speaking to market participants, some say “Thai [producers] have had a good 2 years and are experiencing raw material shortage now, and negative margin”. 
 

Meanwhile, Thai sellers were holding steady most offers at USD/MT 1,860 - 1,870 for Apr and May loading. With freight issues still persisting, even those loading out of Penang have experienced delays and suppliers “facing payment delays” too. This seems to be limited to smaller buyers, as larger tyre manufacturers seem to have chartered vessels to overcome the container shortage. Helixtap assessed STR20 at USD/MT 1,855 FOB BKK LCB. Otherwise, most Thai producers were waiting to see where Hankook would land their LTC, with most expecting it to be the same as Nov 2021 LTC for other manufacturers at a premium of +70 USD/MT. Given high Thai raw material prices, it would be interesting to see if the premium would change.

Meanwhile, more eager sellers in Indonesia have sold at USD/MT 1,840 today with many trades occurring at this level for May loading. Helixtap assessed SIR20 at USD/MT 1,840 FOB BEL SBY. There was even a rumoured trade at 1830 for SIR20 but “was most likely small volume or a top up”. On the ground, Indonesian raw material saw a little lower levels today, dipping below 25,000 IDR/Kg despite the rains and leaf disease which many farmers reported in the past 2 weeks.

Chinese buyers were muted today, although African AFR10 sellers into China found their support levels at 1,750 - 1,770 CIF China for April/May arrival. For international grade, Helixtap assessed the AFR10 CIF Hamburg/Rotterdam a little lower today at USD/MT 1,850. 
 

Bid Offer spread widens, especially for STR20 Grades

(21 Feb) Thai producers held firm today, whilst buyers maintained Friday’s level, with an impasse today. Most thai processors we spoke to talked about “spiking raw material prices, both cuplump and latex” which meant they were not able to lower prices. Helixtap assessed STR20 FOB BKK LCB up slightly at USD/MT 1,865. Some spotted field latex prices in Thailand at 67 - 68 THB/Kg, this represents an increase of 4 THB/Kg compared to prices seen last week, which translated into Thai sellers  pulling back.

Consumers looked to Indonesian cargoes with bids in the range of USD/MT 1,840 - 1,845 for April and May loading FOB Bel Sby. Helixtap assessed SIR20 at USD/MT 1,850/MT FOB Bel Sby with some dealers being a little bit more aggressive than producers who were largely offering at USD/MT 1,860.  At these levels, comparatively Indonesian rubber is more attractive and would appeal more to consumers given the sharp rise in Thai raw material levels. Furthermore, container shortages persisting “affecting the smaller buyers especially loading out from Penang ports and to China”, said one market source.

To read more about Thai processors margins, read our market insight here.

African sellers remained largely sold for April and prompt months, with many even reporting “they were covering some shorts [of raw material]”. Helixtap assessed AFR10 CIF Rotterdam/Hamburg at USD/MT 1,860. African rubber, which has seen the most volatility in the past year, continued this trend with a +15 USD/MT day on day change. African (AFR10) flow to China still continued with offers at or above USD/MT 1,800 for April / May arrivals, whilst bids were at USD/MT 1,760.

Short covering props up spot prices

Some short covering at the Shanghai Futures exchange led to a spurt in the market confidence pushing the spot rubber prices up while the raw material prices continued to remain northbound, sources said Helixtap on Thursday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1850/mt FOB Bangkok/Laem Chabang, up US$10 and African Rubber (AFR) 10 steady at US$1845/mt CFR Rotterdam/Hamburg; while Standard Indonesia Rubber (SIR) 20 was assessed at US$1850/mt FOB Belawan/Surabaya, up US$20 on February 18, 2022.

“The bids jumped today. We saw a lot of short covering in SHFE today,” said a market source today. According to market sources, some of the futures were lagging so the short covering will bring them up to the actual market levels, indicating the fact that futures and the actual physical market are de-linked. The bids for April and May shipments of SIR 20 were in the range of US$1835-US$1845/mt on FOB Belawan/Surabaya.

In October 2021, some speculative buying from China created havoc in the market. There were talks that funds bought more than 200,000 tons at the Shanghai Future's Exchange.

The raw materials prices for Thai rubber continued northbound lending some support for the processed rubber prices. Nevertheless, Thai producers have been feeling the pinch as the margins were under pressure. “The price for processed rubber dropped too fast for them (the producers) to follow. Raw material prices still holding in Thailand, and supply very tight due to monsoons and early wintering in South Thailand,” said another market source.

Helixtap assessed Latex Bulk at US$1650/mt FOB Bangkok/LCB, up US$150, and Thai raw materials at THB 53/kg, up THB 2 over the week, while Indonesian raw material was assessed at IDR 25,000/kg, down by IDR 250 over the week.

Volatile spot prices kept producers at the edge 

Volatile spot rubber market has tethered market participants at the sidelines as producers struggle with squeezed margins while buyers hunt for economic alternatives limiting deal conclusions, sources said Helixtap on Thursday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1840/mt FOB Bangkok/Laem Chabang, up US$10 and African Rubber (AFR) 10 steady at US$1845/mt CFR Rotterdam/Hamburg; while Standard Indonesia Rubber (SIR) 20 was assessed at US$1830/mt FOB Belawan/Surabaya, down US$10 on February 17, 2022.

The overall sentiments remained bearish amid weak buying cues from China. The bids and offer gap widened during the day, indicating a stand-off situation between the buyers and the sellers. A market source noted that the buyer’s expectation is low, adding, “Not many sellers are there in the market. Most producers are sidelined today.” The bid and offer gap widened for SIR 20 as offers for May cargoes were at US$1840/mt FOB, while the bids were at US$1810-US$1820/mt on FOB basis for April and May cargoes.

However, a trade for July shipment of STR 20 was reported at US$1850/mt FOB Bangkok/Laem Chabang, with offers largely in the range of US$1850-US$1860/mt on FOB basis, while bids were at US$1820/mt FOB Bangkok/Laem Chabang for a March cargo. The raw materials prices for Thai rubber continued northbound, supporting the processed rubber prices. Nevertheless, Thai producers feel the pinch as the margins are negative now. “The raw material prices are up, and there is no margin for STR now,” said another market source.

The demand for African rubber remained muted in the Asian market. According to market sources, the Chinese market is quiet, and the offer levels are well below the rest of the world. Some believe that these lower offers are for off-spec rubber mainly produced by the large Chinese producers in Ivory Coast. 

Indo rubber buyers buckle amid limited Thai offers

Indonesian spot rubber price firmed on Asian trade day as the buyers matched the sellers' offer amid limited offers for Thai rubber due to a public holiday in Thailand, sources said Helixtap on Wednesday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1830/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1845/mt CFR Rotterdam/Hamburg, unchanged from February 15, 2022; while Standard Indonesia Rubber (SIR) 20 was assessed at US$1840/mt FOB Belawan/Surabaya, up US$10 on February 16, 2022.

Overall bearish sentiment weighed on the spot prices. However, given the surge in raw material prices, the Indonesian producers opted to hold onto their offers. "I mean raw material is not exactly abundant," said a market source, adding he heard a trade for SIR 20 at US$1840/mt on FOB basis.

The offers for April and May cargoes for SIR 20 were at US$1840/mt FOB, while the bids were slightly higher at US$1820-US$1835/mt on FOB basis for April and May cargoes. According to the market sources, some bids are still below expectation, so the sellers would prefer to wait and watch as the margins are under pressure due to higher raw material costs. There were no offers for Thai rubber in the market due to the public holiday in Thailand.  

Meanwhile, there was a slight uptick in the market sentiment amid easing tensions over Russia's military build-up near Ukraine as Ukraine retreated. This development boosted the market confidence, and the futures market also saw northbound movement.

Negative sentiment on geopolitical risk flows into spot rubber prices

Spot rubber price slide down during Asian trade as market participants were concerned about the overall weakness in sentiment owing to uncertainty around tensions over Russia's military build-up near Ukraine despite the surge in the raw material prices; sources said Helixtap on Tuesday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1830/mt FOB Bangkok/Laem Chabang, down US$30, African Rubber (AFR) 10 stood at US$1845/mt CFR Rotterdam/Hamburg, down US$ 20, and Standard Indonesia Rubber (SIR) 20 at US$1830/mt FOB Belawan/Surabaya, down US$10 on February 14, 2022.

The futures saw a considerable drop indicating that geopolitical risk will be the clear driver of market sentiment this week. "China's commodity market is down, which is sort of bringing rubber down," said a market source.

The prices, as a result, saw a correction both in bids and offers, even though the raw material prices are still northbound. Both STR 20 and SIR 20 reported traded at US$1830/mt on FOB basis, as the Thai producers matched the Indonesian rubber offers to attract buying interest. However, this is likely to weigh on the producers' margin as today's raw material prices saw a steep jump.  

Meanwhile, Indonesian rubber producers tried to hold on to their offers as April cargoes for SIR 20 were at US$1840/mt FOB, while the bids slid down to US$1820-US$1825/mt on FOB basis for April and May cargoes. On the other hand, the offers for STR 20 for June and July shipments hovered in the range of US$1830-US$1870/mt Bangkok/Laem Chabang.

There were some offers for off-spec African rubber, but the prices were weighed by waning demand and bearish market sentiments. The buyers are cautious and are not chasing cargo despite the ongoing wintering in Africa and Thailand.

Prices tread sideways, market cautious

Spot rubber price moved sideways Monday, with some wariness creeping into the market over the sustainability of the current levels in the short to medium term, sources said Helixtap.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1860/mt FOB Bangkok/Laem Chabang, African Rubber (AFR) 10 stood at US$1865/mt CFR Rotterdam/Hamburg, and Standard Indonesia Rubber (SIR) 20 at US$1840/mt FOB Belawan/Surabaya, unchanged from February 11, 2022.

The buyers hugged side-lines as they felt it was too early to say where prices would be in the coming months. “The market is not really active, but looking for cargoes mainly in forward months. The buyers (from China) are buying by arbitrage,” said a market source. The surge in the raw material prices and some interest from China kept the market active during Asian trade day. Meanwhile, there were talks of some container shortages in Thailand, leading to some delays in shipments. Producers feel this might further tighten the supply and keep the price northbound.

Offers for STR 20 for March, June, and July cargoes were in the range of US$1880- US$1900/mt FOB Bangkok/Laem Chabang, slightly higher than last week’s level. A prompt cargo for STR 20 was reportedly traded at US$1850/mt on FOB basis.  

Supply crunch for raw material amid wintering in Thailand has reversed the premium with the gap between the STR and SIR at negative US$20/mt. The Indonesian producers, too, raised their offers on account of the rise in raw material prices.  

Offers for SIR 20 for April and May shipments were in the range of US$1855- US$1865/mt FOB Belawan/Surabaya, while the buying interest was at US$1840/mt on FOB basis. An April cargo for SIR 20 was reportedly traded at US$1840/mt on FOB basis.  

Meanwhile, uncertainty around tensions over Russia’s military buildup near Ukraine could be another blow to an already skittish market that could stoke price pressures if supplies of Russian energy is disrupted.

Wintering soaks up raw materials, spot prices spike

Supply crunch for raw material amid wintering in Thailand and Africa sent the prices spiraling up on the Asian trade day. Meanwhile, Indonesian rubber producers struggled with squeezed profit amid higher raw material prices and low buying expectations; sources said Helixtap on Friday.

Helixtap assessed Latex Bulk at US$1500/mt FOB Bangkok/LCB, up US$80 and Thai raw materials at THB 51/kg, up THB 2.5 over the week, and Standard Thailand Rubber (STR) 20 was assessed at US$1860/mt FOB Bangkok/Laem Chabang, up US$10 on February 11, 2022.

The assessment for African Rubber (AFR) 10 stood at US$1865/mt CFR Rotterdam/Hamburg up US$40 on February 11, 2022.

The market was expecting the prices to soar amid the early wintering in Thailand, and according to market sources, there is wintering in Africa. However, both the buyers and sellers are cautious about booking cargoes as there is no guarantee of raw material availability going ahead. Moreover, the shortage of containers is delaying the shipments out of Thailand, disrupting the supply chain.

“STR is tight for nearby (prompt months) and is hard to buy. Africa is also now into wintering mode, so the output is lesser,” said a market source. Offers for STR 20 for April, June, and July cargoes were in the range of US$1860- US$1890/mt FOB Bangkok/Laem Chabang. There was some buying interest from Indian buyers, but lower buying expectations limited the deal conclusion.

Conversely, Indonesian producers saw a dip in their margins amid soaring raw material prices and waning demand. According to market sources, there are both bids and offers, but the buyers are not chasing cargoes anymore. However, the Indonesian producers continued to adjust their offers to keep their production running.

Helixtap assessed Indonesian raw material at IDR 25,250/kg, up by IDR 950 over the week, while Standard Indonesia Rubber (SIR) 20 at US$1840/mt FOB Belawan/Surabaya, down US$7.5 on February 11, 2022. 

Thai sellers shy away anticipating raw material shortage

Thai sellers shied away from offering for the coming months as they failed to secure raw materials due to early wintering in Thailand, keeping the spot prices stable. Meanwhile, Indonesian rubber inches up on some buying interest; sources said Helixtap on Thursday.

Helixtap assessed Standard Thailand Rubber (STR) 20 stable at US$1850/mt FOB Bangkok/Laem Chabang, Standard Indonesia Rubber (SIR) 20 at US$1847.5/mt FOB Belawan/Surabaya, up US$7.5, and African Rubber (AFR) 10 at US$1825/mt CFR Rotterdam/Hamburg up US$15 on February 10, 2022.

The Thai rubber producers picked up the go-slow strategy as wintering starts in Thailand, resulting in limited offers in the market during the Asian trade day. According to a market source, he is offering STR 20 at US$1870/mt on FOB basis but "is not too keen to sell". Furthermore, as the wintering has already started in northern Thailand, the raw material shortage is hitting the market; as a result, the producers are unable to secure raw materials for the coming months.

There is some buying interest from India, but the low buying expectations failed to capture the seller's interest. Offers for STR 20 for March and May cargoes were in the range of US$1870- US$1900/mt FOB Bangkok/Laem Chabang, while the buying interest was at US$1830/mt.

Meanwhile, Indonesian producers feel a squeeze on their margin as they try to remain competitive amid some uptick in the raw material prices. In addition, some slowdown in demand from the US and Europe post Fed's decision to hike interest rates has impacted the Indonesian rubber demand. According to another market source, the weakness in the international market has wither the buying interest for Indo rubber. "So, the profit was squeezed in Indonesian rubber," he added.

However, regular buying interest from specific major consumers for Indonesian rubber continued to support the prices. A trade for April shipment of SIR 20 was reported at US$1840/mt FOB Belawan/Surabaya, while the buying interest inched up to US$1845/mt during the day.

The African rubber, on the other hand, failed to edge into the Chinese market due to competitive Thai rubber offers. "The market overall is trending higher, but it's not doing much for African prices in China. It is either (offered) on an outright basis or even as a differential to STR etc. In fact, if anything, the differential is widening!", said a trading source. However, Western countries still have some interest due to its proximity, which kept the African rubber market active.

Short covering anticipating shortage props spot prices

Spot rubber prices find support on Asian trade day backed by some short covering as market participants anticipate a shortage amid the early wintering in Thailand; sources said Helixtap on Wednesday.

Helixtap assessed Standard Thailand Rubber (STR) 20 stable at US$1850/mt FOB Bangkok/Laem Chabang, Standard Indonesia Rubber (SIR) 20 at US$1840/mt FOB Belawan/Surabaya, up US$5, and African Rubber (AFR) 10 at US$1810/mt CFR Rotterdam/Hamburg up US$10 on February 9, 2022.

According to market sources, market participants are covering shorts for both Thai and Indonesian rubber. The situation was triggered by overselling of STR by some traders when the availability was better, said a market source, adding that with the current shortage in the material, they (the traders) are trying to buy back. Meanwhile, the wintering has started in parts of Thailand, and the tapping activities have already stopped in north Thailand. As a result, the prices of raw materials are spiraling up. The South of Thailand is likely to stop tapping activities by the end of February.

The Chinese buyers are also trying to keep pace by covering for positions before the price hike. “The buyers (Chinese buyers) are buying for nearby but far months (long positions) are hard to sell,” said another market source. According to some industry sources, a few cargoes for STR20 were sold in the range of US$1825-US$1850/mt CIF China. “We have not started buying yet, though Thai wintering may prompt some buying,” noted a Singapore-based source. In addition, there was a wide range of offers for STR 20 for March, June, and July cargoes at US$1850- US$1880/mt FOB Bangkok/Laem Chabang.

The Indonesian rubber, too, witnessed similar traction in the market. However, the buyers were not chasing cargoes as the threat of a shortage is limited at the moment. “I guess consumers are holding out for lower to see who gives in first. So it seems consumers are not chasing,” said a trader source.

On the African front, the sellers tried to tap into the recent buying spree and concentrated on off-spec materials to cater to the Chinese demand. Moreover, according to market sources, there are limited offers of African cargo, especially for the prompt months, lending some support to the prices.

Thai prices bullish, demand drifts towards Indo

Thai spot rubber prices remained bullish during Asian trade day riding on higher raw material prices, while Indonesian rubber finds support from a spurt in demand as buyers opt for the economical source, sources said Helixtap on Tuesday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1850/mt FOB Bangkok/Laem Chabang, up US$25, Standard Indonesia Rubber (SIR) 20 at US$1835/mt FOB Belawan/Surabaya, up US$7.5 and African Rubber (AFR) 10 at US$1800/mt CFR Rotterdam/Hamburg up US$15 on February 8, 2022.

"We would be at the high-end today $1,870 or maybe higher than that," said a Thai market source indicating at the rising offer prices. However, this has drifted the buying interest away as buyers are uncertain about the sustainability of the hike in prices.

Meanwhile, there is a supply constraint for Thai raw materials as wintering has started in parts of Thailand, and the southern region would also be impacted by the end of the month. According to market sources, raw material prices, especially field latex, have seen a steep rise this week. "It is throwing off all the other grades like RSS and STR 20. I doubt STR 20 is presently anyone's #1 choice," the source added.

There was a wide range of offers for STR 20 for March, June, and July cargoes at US$1840- US$1880/mt FOB Bangkok/Laem Chabang, while a firm buying interest for June shipment was reported at US$1850/mt on FOB basis.

On the other hand, the Indonesian market has turned out to be an economical option in the market with regular buying interest from Japanese buyers. Since last week, there has been some uptick in the Indonesian raw materials prices, but the prices mainly see support from consistent buying. Several trades for April and May shipments of SIR 20 were reported in the range of US$1825- US$1835/mt FOB Belawan/Surabaya. Meanwhile, the premium saw a reversal once again, with the gap between STR and SIR at negative US$15. According to Helixtap data, in January, the premium for STR reached the highest of US$45.

Spot prices find support but market lacks direction

Spot rubber market prices saw support amid higher raw material prices and some demand from Japanese buyers on Asian trade day. Meanwhile, uncertainty around the demand situation and sustainability of the current spurt in prices made buyers and sellers resort to a go-slow strategy; sources said Helixtap on Monday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1825/mt FOB Bangkok/Laem Chabang, up US$15, Standard Indonesia Rubber (SIR) 20 at US$1827.5/mt FOB Belawan/Surabaya, up US$12.5 and African Rubber (AFR) 10 at US$1785/mt CFR Rotterdam/Hamburg up US$5 on February 7, 2022.

According to the market sources, the prices saw support mainly due to costlier higher raw, as wintering already started in parts of Thailand. "The wintering has already started in northeast Thailand. It is scheduled to start in mid- February in upper south of Thailand and end of February in lower south regions," said a market source.

The market participants expect the prices to be northbound going ahead as the field latex prices have been steadily rising since late last week. However, there is resistance amid buyers at higher offers for STR 20 as demand is yet to see a rebound. There was a wide range of offers for STR 20 for March, June, and July cargoes at US$1830- US$1870/mt FOB Bangkok/Laem Chabang, while the buying interest was at US$1820/mt on FOB basis

Meanwhile, the Chinese market is yet to resume operations in full swing due to the winter Olympics. Some market sources noted that there are reports of China tire factories are still closed or on go-slow due to the Beijing Olympics. As a result, the demand pick-up, especially from China, is expected to be slow, bringing in doubt around the sustainability of the prices.

At the Indonesian front, regular interest from the Japanese buyers and the surge in the prices of the raw materials gave spot rubber prices a solid opening for the week. Since last week, there has been some rise in the Indonesian raw material prices, which ceased the correction in the processed rubber prices, which reflected in the day's bids and offers. A few trades were reported for SIR April 20 cargoes at US$1825- US$1830/mt FOB Belawan/Surabaya, while the bids were about US$10 higher at US$1825/mt on FOB basis compared to February 4, 2022.

Meanwhile, the availability of West African shipments for March remained limited. However, with the bearish US and European market amid rising Asian rubber prices, it might turn out to be an economical source for Asian buyers.

Spot prices steady, participants side-lined awaiting clarity  

Limited bids and offers during the Asian trade day in the spot rubber market kept the prices stable across the board. Meanwhile, the market participants hugged the sidelines, awaiting more clarity on the impact on the market with the upcoming stimulus in China and tightening of liquidity in Europe and the US to curb inflation; sources said Helixtap on Friday.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1810/mt FOB Bangkok/Laem Chabang, Standard Indonesia Rubber (SIR) 20 at US$1815/mt FOB Belawan/Surabaya, and African Rubber (AFR) 10 at US$1780/mt CFR Rotterdam/Hamburg all unchanged from February 3, 2022.

There are not many offers in the market, said a market source adding, “It seems March SIR20 all gone.” Several market participants are still out of the market because of the Lunar New year holidays and are expected to return next week. “Today, both physical and futures markets are very quiet. However, the premium is still the same,” noted another market source, indicating that both the buyers and suppliers are not keen on booking/selling.

Market participants expect some rebound banking on People’s Bank of China’s decision to cut key interest rates once the market resumes activities post the Lunar New Year holidays. However, the Bank of England’s move to increase its key interest rate to contain the inflation, which followed the Fed’s similar decision, has dampened the sentiments. The market thus awaits to see the real impact of the same on the physical market.

According to an Indonesian market source, a SIR 20 cargo was traded at US$1815/mt FOB Belawan/Surabaya while the rest of the market remained sidelined. There was also an offer for STR June 20 cargo at US$1860/mt FOB Bangkok/Laem Chabang. According to some market sources, the availability of West African shipments for March was also limited.

Meanwhile, Indonesian raw materials saw a slight uptick amid limited availability, according to market sources. Thai raw materials, meanwhile, remained largely stable. Helixtap assessed Latex Bulk at US$1420/mt FOB Bangkok/LCB and Thai raw materials at THB 48.5/kg, stable over the week. Indonesian raw material, meanwhile, was assessed at IDR 24,300/kg, up by IDR 50.

Slight uptick due to opportunistic buying from India amidst Chinese week long holiday 

(03 Feb 2022) With most of Asia on a short week this week, and China absent from the market, market participants opted to hold on to last week’s prices.

India buyers were seen filling in some gaps opting for value for money AFR10 with traded levels for April arrival seen at USD/MT 1,810 CIF India main ports. Otherwise, African origin rubber demand continued to remain strong in the US and Europe. Helixtap assessed AFR10 CIF Rotterdam/Hamburg today at USD/MT 1,780, 20USD/MT higher than the previous working day, 31 Jan 2022.

Some companies in Malaysia and Singapore are scheduled to be back on 7th of Feb, and market activity remained largely muted. 
 

For those who were back to office, offers were a little unsure where to start, with many Thailand producers opting to play safe at USD 1,820 - 1,830 levels and with most buyers being shy. Helixtap assessed STR20 FOB Bangkok/Laem Chabang today at USD/MT 1,810.
 

Indonesian market sources still pointed to “raw material tightness, with ample tonnage needing 24,000 IDR/Kg or higher”. Looking at Helixtap’s weekly assessed Indonesian raw material prices at 24,250 IDR/Kg as of 28 Jan 2022, it seems Indonesian producers are unlikely able to lower their prices and we might have reached a support level. Helixtap assessed SIR20 FOB Belawan Surabaya today up 5 USD/MT at USD/MT 1,815. 

Inflation and China uncertainty

Inflation in emerging markets looks set to skyrocket with Turkey hitting 48.7%. Pakistan is also struggling with inflation. Typically inflation has a positive correlation with commodities. Furthermore, automakers demand for semiconductors has increased (chip sales are expected to grow by another 9% this year) - assuming increased car production, this would have a positive effect for tyre demand and linked to that, rubber.

However, checking in with a few Singapore based traders in China-linked companies, most of them were “less optimistic about China’s economy this year and the demand going forward”. Others worry about “India being able to take over China’s volume as it doesn’t look too bullish either”. 
 

Physical rubber prices hold steady after sliding for most of the week 

Spot physical rubber market prices hold steady after trending downwards for most of this week. 

Helixtap assessed Standard Indonesian Rubber (SIR) 20 at US$1740/mt FOB Belawan/Surabaya, up US$5/mt, Standard Thailand Rubber (STR) 20 at US$1668/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1670/mt CFR Rotterdam/Hamburg on 24th June 2022. 

The increase in the SIR 20 assessment today halts three consecutive days of price decreases. Prices were trading from US$1730/mt to US$1750/mt for most of the week, with prices trending more towards the lower end of US$1730/mt yesterday. Latest transacted deals reported were mostly in the range from US$1740/mt to US$1745/mt. As discussed, the narrow margin spread between SIR 20 and Indonesian Raw Material prices might have provided some support to the SIR 20 price. 
 

Prices for STR 20 and AFR 10 have held steady. Supplies of STR 20 continue to be offered on the market at around US$1680/mt for loading in September and around US1690/mt for loading in October. This is slightly lower than the offer prices of US$1700/mt to US$1720/mt at the start of this week. Such a drop is likely due to the still wide bid offer spread. Offers for AFR 10 continue to hold steady and firm. They range from US$1670/mt to around US$1710/mt depending on the loading month. 

Helixtap Indonesian Raw Material price is assessed to hold steady this week. Most offers are around IDR 24,000, with a slightly higher price for lower volume purchases.  Both Thai Raw Material and Latex prices are assessed to trend downwards this week. Market feedback suggests weak demand, especially from China, has put downward pressure on prices. Compared to last week, both offers and final transacted prices have dropped by around US$80/mt. Various market participants are not optimistic of prices moving forward, especially if demand from China continues to be tepid and uncertain. 

While demand is expected to be weak and uncertain in the months ahead, supply is likely to receive a boost from an increase in rainfall. Based on a research study on the relationship between rainfall and rubber production, rubber production was observed to increase during months of rainfall above 150mm in South Sumatera. The research study was published in the IOP conference series on earth and environmental science. Based on weather forecast data from their respective national meteorological agencies, rainfall in Thailand and Indonesia is expected to exceed 150mm in Q3 this year.  If such an increase in rainfall actually translates to an actual increase in rubber supply, it would only put more pressure on global physical prices in the next quarter, especially during a time when demand is still recovering.

Steep drop in raw materials prices weigh on spot

The raw material prices saw a sharp drop over the week, weighing on spot prices coupled with overall bearish cues, sources said Helixtap on Friday.  

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1752.5/mt FOB Belawan/Surabaya, down US$7.5, Standard Thailand Rubber (STR) 20 at US$1680/mt FOB Bangkok/Laem Chabang, down US$20, and African Rubber (AFR) 10 at US$1680/mt CFR Rotterdam/Hamburg, down US$10, on June 17, 2022.

On the raw material front, Helixtap assessed Indonesian raw material at IDR 23,850/kg, down IDR 650, Latex Bulk at US$1345/mt FOB Bangkok/LCB, down US$120, and Thai raw at THB45/kg, down THB 5 over the week.

According to market sources, there was hardly any demand during the Asian trade day. The absence of Chinese buyers, coupled with the central banks doubling down to tighten monitory policies to tame inflation, has dampened the buying sentiment. 

“A very slow week indeed. Buyers have become rare species. Difficult find one,” said a producer source. According to a Thailand-based source, there are rains in some areas, which is likely to continue. However, given limited demand in the market, it is unlikely to affect the prices.

Some Thai producers adjusted their offers with September and October loading cargoes being offered STR 20 in the range of US$1710-US$1730/mt FOB Bangkok/Laem Chabang. Few deals were concluded below US$1700/mt FOB level for Thai rubber.  

Meanwhile, Indonesian producers largely stayed away from the market. The buying interest for September shipments was at US$1750/mt on FOB, but the producers were unwilling to match. 

Indo & Vietnam spot prices find raw material support 

Indonesian and Vietnamese spot rubber prices saw some support from the raw material prices compared to the Thai and African rubber prices, even though Standard Indonesia Rubber (SIR) 20 saw a marginal drop of 1%, according to Helixtap data. Meanwhile, the Thai rubber market is witnessing a supply glut situation, sources said on Friday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1795/mt FOB Belawan/Surabaya, down US$5 on June 10, 2022, and Indonesian raw material at IDR 24,500/kg, up IDR 300 over the week.

A trade for August and September shipment for SIR 20 was reported at US$1795/mt FOB Belawan/Surabaya. However, the producers held on to their offer above the US$1800/mt level. “Buyers seem to have a Friday spirit,” said a producer source, adding he is offering US$1810/mt on FOB basis. 

The situation is similar for Vietnamese rubber as well, given the offers for Standard Vietnamese Rubber (SVR) 20 saw a marginal rise of around 0.3%. According to market sources, offers for July and August for SVR 20 at US$1655/mt FOB Ho Chin Minh. “I think there is a lack in raw materials and some demand from China,” said a trader source. 

Supply glut for Thai rubber 

The Thai rubber market has been witnessing some supply glut situation over the week, with some producers willing to match the buyer’s expectation to liquidate volume. 

According to market sources, offers for July to September cargoes of STR 20 are in the range of US$1740-US$1780/mt FOB Bangkok/Laem Chabang. However, some producers were willing to adjust upto US$1730/mt on FOB basis. 

STR 20 offers continued to see a big range, especially for producers who intend to keep the cash flow and sell volume. Earlier in the week, some prompt trades were reported as low as US$1700-US$1720/mt on FOB basis.

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1730/mt FOB Bangkok/Laem Chabang, up US$5, on June 10, 2022, and Latex Bulk was assessed at US$1465/mt FOB Bangkok/LCB, up US$5, and Thai raw material was steady at THB49/kg, over the week.

According to a Thailand-based source, latex is concerned that the market has been extremely quiet. “Also, field latex prices are extremely high, considering it’s difficult to find buyers even at discounted prices. Also guess it’ll probably continue as Shanghai goes back to lock down some areas. Frankly, I would say the market will be depressed for some time as far as latex is concerned,” he added.

African rubber drop continues 

Helixtap assessed African Rubber (AFR) 10 at US$1730/mt CFR Rotterdam/Hamburg, down US$20, on June 10, 2022. Sentiment surrounding the Covid situation in China may have dampened the sentiment as the government is likely to re-impose restrictions in parts of Shanghai. In addition, the rate hike guidance from the European Central Bank and upcoming U.S. inflation data also kept the market jittery.

Spot prices rise stalled on buyer’s resistance

The rise in Asian spot prices stalled during the Asian trade day amid buyers’ resistance to higher offer levels. Meanwhile, the market activities were largely muted amid holidays in China and Thailand; sources said Helixtap on Friday.

Helixtap assessed Standard Thailand Rubber (STR) 20 and Standard Indonesia Rubber (SIR) 20 steady at US$1740/mt FOB Bangkok/Laem Chabang and US$1810/mt FOB Belawan/Surabaya, respectively, while African Rubber (AFR) 10 was up US$ 30/mt at US$1770/mt CFR Rotterdam/Hamburg on June 03, 2022.

The market activities remained muted due to the Dragon boat holiday in China and the public holiday in Thailand. However, there was a clear indication from the buyers that they are not willing to inch higher. Even though the market has opened up the overall sentiment continued to remain bearish as the current spurt was largely driven by short covering.

China's central bank is likely to strengthen the implementation of its prudent monetary policy to support the economy. However, the liquidity to boost the economy will take some time. Moreover, the western countries are too battling inflation which has kept the buying limited.

There was a slight dip in offers for August shipments for SIR 20 to US$1825/mt FOB Belawan/Surabaya, while the buying interest was still at US$1800/mt on FOB basis. “It is still high, the consumer traded level is US$1800/mt on FOB basis,” said a trader source.

The offers for prompt shipments of STR 20 were reported at US$1740/mt on FOB basis while buying interest was US$1720/mt on FOB basis. There was some buying interest from India, however, their buying expectations did not match producers’ expectations.

Meanwhile, the raw material prices too continued to remain northbound. Helixtap assessed Latex Bulk was assessed steady at US$1460/mt FOB Bangkok/LCB, up US$30 and Thai raw material was at THB49/kg, up THB 1.5, and Indonesian raw material at IDR 24,200/kg, up IDR 300 over the week. Meanwhile, reports of some rains in Thailand kept the supply of raw materials tight, and weakness in the Asian currencies also supported the prices.

Spot prices rise stalled on buyer’s resistance

The rise in Asian spot prices stalled during the Asian trade day amid buyers’ resistance to higher offer levels. Meanwhile, the market activities were largely muted amid holidays in China and Thailand; sources said Helixtap on Friday.

Helixtap assessed Standard Thailand Rubber (STR) 20 and Standard Indonesia Rubber (SIR) 20 steady at US$1740/mt FOB Bangkok/Laem Chabang and US$1810/mt FOB Belawan/Surabaya, respectively, while African Rubber (AFR) 10 was up US$ 30/mt at US$1770/mt CFR Rotterdam/Hamburg on June 03, 2022.

The market activities remained muted due to the Dragon boat holiday in China and the public holiday in Thailand. However, there was a clear indication from the buyers that they are not willing to inch higher. Even though the market has opened up the overall sentiment continued to remain bearish as the current spurt was largely driven by short covering.

China's central bank is likely to strengthen the implementation of its prudent monetary policy to support the economy. However, the liquidity to boost the economy will take some time. Moreover, the western countries are too battling inflation which has kept the buying limited.

There was a slight dip in offers for August shipments for SIR 20 to US$1825/mt FOB Belawan/Surabaya, while the buying interest was still at US$1800/mt on FOB basis. “It is still high, the consumer traded level is US$1800/mt on FOB basis,” said a trader source.

The offers for prompt shipments of STR 20 were reported at US$1740/mt on FOB basis while buying interest was US$1720/mt on FOB basis. There was some buying interest from India, however, their buying expectations did not match producers’ expectations.

Meanwhile, the raw material prices too continued to remain northbound. Helixtap assessed Latex Bulk was assessed steady at US$1460/mt FOB Bangkok/LCB, up US$30 and Thai raw material was at THB49/kg, up THB 1.5, and Indonesian raw material at IDR 24,200/kg, up IDR 300 over the week. Meanwhile, reports of some rains in Thailand kept the supply of raw materials tight, and weakness in the Asian currencies also supported the prices.