Heavy rain forecasts in Thailand drive raw material prices north

Reports of heavy rains in Thailand have driven the raw material prices up during the week as the market experts see some more support amid the expectation of weather to worsen. The situation amped up the spot rubber prices as the Chinese buyers continued to remain bullish, expecting a supply shortage.

“With the Thai flooding news, Chinese are slightly more bullish and taking note of the flood,” said a Singapore-based trader. Even though Thai raw material prices saw a marginal rise over the week, the market expectation is that the prices are likely to remain northbound in the coming week, amid the forecasts of another storm in the first week of October.

“Had a lot of rain this week. Some provinces are flooded. Even Bangkok is under flood threat,” said a Thailand-based source. Some market participants feel this could be a much-needed breather for the spot prices as the weather disruption clubbed with the restocking in China.

According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. The prices for Thai raw materials ranged between THB 39-THB 44.5/kg ex-works. The market, however, remained divided on the extent of the impact of the rains.

Some strength was seen in the Indonesian raw material prices as well. While the raw material prices have surged on some firm buying interest, there is some ambiguity about the factories still producing in the region. According to market sources, owing to continued pressure on  prices, some Indonesian factories are “on shaky ground” or even have shut down.

Helixtap assessed Indonesian raw material was assessed at IDR 18,400/kg, up IDR 350, and Thai raw at THB 41/kg, up THB 1.5 over the week.

However, the market was slightly slow for latex despite some buying interest from China in the TSR market. Market sources noted that China was a very active buyer last week. However, this week, Chinese buyers for latex are relatively quiet. “There hasn’t been much activity apart from a few sporadic buying,” the Thailand-based sources added. Helixtap assessed Thai Latex Bulk was assessed at US$ 9250/mt FOB Bangkok/LCB, down US$75, over the week. 

TSR upbeat on China 

Chinese buyers were snapping up cargoes this week, with the buying frenzy continuing across the curve. The buying interest was seen across many grades. "I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter," a China-based trader said earlier this week.

Thai sellers were seen preferring sales to China due to less stringent requirements and with current supported CIF China levels. According to market sources, some producers buy raw materials to fulfill the forward bookings. With China's demand seemingly back in the market, this could be the turning point and start of some upward price movement. However, some market participants are skeptical of the rebound to sustain.

With some expectations for support post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending would add to the market's bearishness, prompting the government to provide more economic stimulus.  

For STR20 Mixture, the prices spot market was seen in the range of US$1370- US$1375/mt CIF China main ports for October and November arrival. However, for forward cargoes, the range was at US$1380 – US$1390/mt CIF China. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$1375/mt CIF China, steady over the week.

Indo still competitive in international market 

While China did bring in some optimism in the market, the international market continued to remain sluggish, capping the rise in the spot market. Meanwhile, Indonesian rubber continued to remain the economic alternative for international buyers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while for the forward months was a bit higher at US$1350/mt FOB Belawan/Surabaya. The Indonesian market seems to be in a contango with most buyers and sellers active in the forward month bookings.

"There are no international buyers since SIR offered at par with SICOM. So, all buyers moved to buy SIR," a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR, or mixture.

African sellers were seen offering very competitive prices at US$1300 – US$1310/mt CIF China main ports as some African producers needed to liquidate volume, as per market sources. On the European front, the buyers continued to remain cautious, which explained the aggressive offering into China but followed the rest of the market on a slight upward trend.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, steady, Standard Thailand Rubber (STR) 20 at US$1352.5/mt FOB Bangkok/Laem Chabang, down US$7.5, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, steady, on September 30, 2022.

Spot prices firm on bullish China

Spot rubber market found some support amid rain reports in Thailand, making the Chinese buyers bullish as they continue to restock before the Golden Week holidays. A trickle effect was seen across the board; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, up US$10, Standard Thailand Rubber (STR) 20 at US$1360/mt FOB Bangkok/Laem Chabang, up US$10, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, up US$5, on September 29, 2022.

“It’s raining in Thailand, so China is a bit bullish,” said a Singapore-based trader. According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. While some Thai producers held back their offers to assess the actual market level, Indonesian producers increased their offers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while the buying interest for the forward months was a bit higher at US$1345/mt FOB Belawan/Surabaya. The Indonesian market seems to be in contango with most buyers and sellers active in the forward month bookings.

The market, meanwhile, remained divided on the extent of the impact of the rains in Indonesia. While some noted that there are still a lot of offers for Thai rubber in the market, SIR continued to be the more economical option for international.

“People expect the market to go lower, so dumping the stock. And SHFE seems better supported with sentiments around China congress,” said a producer source. Meanwhile, the buying interest remained limited for African rubber, with some sellers struggling to match the buying expectation. A trader source noted they received a bid at US$1250/mt CIF China. “But it is not workable with factory,” he added.

With some expectation post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending adds to bearishness in the market, which, however, might prompt the government to provide more economic stimulus.

Competitive Indo rubber prices restricted Thai to China

Thai rubber producers opted to sideline or offer into China as buyers opted for the economical Indonesian rubber during the Asian trade day. Meanwhile, there seemed to be some concerns around the sustainability of the recent support to the market amid restocking from China; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1325/mt FOB Belawan/Surabaya, down US$10, Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang, steady, and African Rubber (AFR) 10 at US$1305/mt CIF Rotterdam/Hamburg, down US$5, on September 27, 2022.

“There are no international buyers since SIR offered at par with SICOM. So all buyers moved to buy SIR,” a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

However, given the recent restocking in China ahead of the Golden week holidays, the Thai producers seemed content just offering into China, with sources noting that some might be overbooked for the first quarter of 2023. According to market sources, some producers buy raw materials to fulfill the forward bookings.

While this seems to be bringing in some optimism for the spot and futures market, there is still some anticipation around the sustainability of the uptick. “This is their pre-long holiday buying. I heard after the one-week holiday, some China factories would extend their shutdown for maintenance and repair reasons. Also hearing about mid of next month election and may impose measures to reduce pollution,” a Singapore-based source noted. This does cast a shadow on the mid-term market sentiment.

On the other hand, the Indonesian prices continued to remain volatile with some correction in the prices today. The appreciation in the US dollar did cap the slide, but the Indonesian producers seemed willing to adjust the prices to keep the volume moving. The traded level for December shipments of SIR 20 was at US$1325/mt FOB Belawan/Surabaya, while the buying interest was at US$1315/mt FOB Belawan/Surabaya.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. “Yes, we have seen freights drop from Indo as well,” said another producer source. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR or mixture. “Need to compare freight rates too. Compare landed cost,” the trader source added.

Meanwhile, trades for STR 20 mixture were reported at US$1380/mt on CIF basis in China. Therefore, the market feels the momentum might carry forward provided the Chinese yen sees some appreciation against the US dollar.

Chinese demand strong, right before Golden Week

(27 Sep) Chinese buyers were seen snapping up cargoes this week, with the buying frenzy continuing all across the curve. The buying interest was seen across many grades. For STR20 Mixture, prices for spot were seen at USD/MT 1,370 CIF China main ports for Oct and Nov arrival. For further out cargoes, the range was USD/MT 1,380 - 1,390 CIF China.

Gap narrows between Indonesian and Thai Grades

Helixtap assessed SIR20 FOB Belawan Surabaya 1,335 USD/MT whilst Helixtap assessed STR20 FOB Bangkok Laem Chabang 1,350 USD/MT. The gap has since narrowed to 15 USD/MT, with some Indonesian producers hoping for a rebound, and holding back offers. 
 

Others used the slight rise in levels to lock in sales, as they believe “demand recovery will take some time” with many trades done between 1,330 - 1,340 USD/MT. Sellers for Q12023 for Indonesian grades reflected the uptick by increasing their offers to USD 1,360 - 1,370 FOB Belawan Surabaya.
 

African sellers aggressively selling in to China

African sellers were seen offering very competitive prices, USD/MT 1,300 - 1,310 CIF China main ports. Based on sources Helixtap spoke to, these also include large African producers who seemed like they needed to sell volume. On the European front, buyers continue to remain cautious, which explains the aggressive offering into China but followed the rest of the market on a slight upward trend. Helixtap assessed AFR10 CIF Hamburg Rotterdam 1,310 USD/MT.
 

Some Chinese traders Helixtap spoke to said, “I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter.”
 

Thai sellers have been preferring sales to China due to less stringent requirements, and with current supported CIF China levels, the FOB netback is almost the same as international grade i.e. USD/MT 1,345. 

Golden Week - the turning point?

With China demand seemingly back in the market, this could be the turning point and start of some upward movement in prices. 

Looking at SHFE stockpiles, they remain stable but recent demand activity could indicate a few things:

• Weaker RMB means Chinese traders have prioritized RMB trades, and are looking for ex warehouse deals.
• With the rest of the world removing the last of COVID restrictions, it could be a sign traders are expecting China to follow suit after Golden Week holidays.
• Prices have hit a technical support level and at these attractive levels, buyers are willing to lock-in purchases all the way out to March 2023

Widening premium gives Indonesia rubber the edge

With the spot market essentially treading sideways, Indonesian spot prices continued to slide during the Asian trade day, widening the Thai-Indo premium, giving it a competitive edge in the market after almost six months of lull; sources said Helixtap on Monday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1312.5/mt FOB Belawan/Surabaya, down US$15, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, steady, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$5, on 26 September, 2022.

The market sentiments remained extremely bearish owing to the negative cues, which continued to weigh in on prices. In addition, while most central banks worldwide continue to hike interest rates to tackle inflation, the concerns about the global growth outlook have been increasing.

The Indonesian producers, however, were seen adjusting their offers and willing to correct further for a serious bid. The traded level for November and December shipments of SIR 20 were in the range of US$1310-US$1315/mt FOB Belawan/Surabaya. However, some producers said they could lower further, “We’d probably sell at 130 if bid”.

While this widens the gap between the Indonesian and Thai rubber, it is impacting Indo producers’ margins significantly. “(Margin) that word has not been in an Indo shippers vocabulary for a good three months,” a producer source added.

Meanwhile, the Thai producers held on to their offers amid minimal interest, widening the gap between SIR 20 and STR 20 to negative US$32.5/mt as of 26 September 2022, while the average for the month is around US$3/mt. This has piqued some interest for Q1 shipments. Offers for October to December shipments of STR 20 were priced at around US$1380/mt on FOB basis.

The African rubber market was largely muted as the producers held on to their offers, and no interest from buyers limited the market activities. “Not much is happening. No bids from customers neither offer from factories,” a trader source noted. The producers have been holding offers in the range of AU$1330-US$1350/mt on CIF basis since mid-September. 
 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Spot activity moves forward, prices close to floor

The shift in the buying pattern during the week despite underscored expectations for tighter monetary policy and a slowing global economy could indicate that the spot prices are finally nearing the floor. The market, however, remained divided on the rationale behind the shift in the buying pattern, with some attributing it to possible positives in the upcoming China congress while others feel the prices have very little room for correction. 

While the overall sentiments remained bearish, with expected Fed hike, building inflationary pressure, and Russian President Vladimir Putin's announcement of partial military mobilization, the market activity shifted from prompt to forward months. 

The situation could be deemed as unusual as for the past few years, with the outbreak of Covid followed by some rebound coupled with a series of black swan events, the instinctive move has been to book as prompt as possible. While some sources tagged the current situation as a "crazy market," the possible explanation could be the prices are closing in now, and the buyers believe in the same. 

Some markets, like Indonesia, have seen a challenging year amid almost a year of negative margins and a considerable inflow of African raw materials. As a result, prices tumbled down. According to Helixtap data, Indonesian producers are seeing a negative margin of 4.1% as of September 23, 2022. The traded level for November and December shipments of SIR 20 continued to remain downcast, closing the week at US$1325- US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya.

"Don't hope for too much more down. Low prices mean all sellers' margins are reduced," said a producer source indicating that the prices are possibly nearing the floor. At least for Indonesia, the current glut is primarily triggered by the cancellation of LTC and massive African imports. According to market sources, around a 50%-70% reduction in LTCs for the rest of 2022 is weighing heavily on spot rubber prices.

During the Asian trade day, the prices remained largely stable, closing the week at a more or less stable now. Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1327.5/mt FOB Belawan/Surabaya, down US$2.5, on September 23, 2022.

Chinese buying triggered increased activities 

There was some uptick in Chinese buying this week amid southbound prices. However, the interest broadly hovered in the forward months. While this could be a part of the restocking China does before the Lunar New year holidays, which is at the end of January in 2023, some market participants believe the increased activity is due to the anticipation of some positive policy announcement in the upcoming Congress. 

“China super active. Expecting something around China congress. At market level, fundamentals are very weak but China sentiments around the Congress helping keep market at this level,’ said another producer source. According to some market participants, Chinese buyers are bidding till February 2023 as most of the factory stocks for 2022 are sold. “ 

The traded level for October and November arrival shipments was reported in the range of US$1355-US$1380/mt on CIF basis during the week. For January, however, was around US$ 1400/mt on CIF basis. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$13750/mt CIF China, up US$15 over the week.

China’s decision to keep its benchmark lending rates unchanged with some easing in the Covid lockdowns supported the sentiment. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

Pressure on AFR, Thai opts mixture, spot rangebound  

The Thai seller, on the other hand, continued to hold on to the offers for prime rubber despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped over. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber. 

Some sellers noted that selling "Normal China or mixture" Thai rubber in China is better. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the pressure was also seen building on the African front. Even though there has been some price correction, some African producers are unwilling to buck down. "Offers from factories are still coming in high," said a trader source. 

According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In an attempt to adhere to their fair price commitment, some producers cannot benefit from the raw material price correction, limiting the scope for lowering the offers. 

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, both steady, on September 23, 2022.
 

Raw material market mixed

The desperation amid the sellers owing to the downcast demand kept the raw material market southbound during the week. Even though there were reports of rains in parts of Thailand impacting the tapping activities and logistics, the raw material prices continued to remain weak. "There is not much supply of field latex as it's raining in all parts of Thailand," said a Thailand-based source adding the Thai cup lumps prices are around THB395.-THB 40/kg ex-works. However, there was some interest from China for latex bulk, with the traded level at US$1070-US$1090/mt on CIF basis. However, the prices failed to see support. 

Meanwhile, the Indonesian raw material prices also saw a correction, but not to the level the market expected amid the glut. The raw material prices ranged between IDR 17,600- IDR 18,500/kg ex-works. The market participants feel there is hardly any room for more correction, even though some African raw material is still floating in the market.

Helixtap assessed Indonesian raw material at IDR 18,050/kg, down IDR 450, Thai Latex Bulk was assessed at US$1000/mt FOB Bangkok/LCB, down US$10, and Thai raw at THB 39.5/kg, down THB 1.5 over the week.

Fed rate hike weighs on sentiments, spot southbound

The spot rubber prices were southbound during the Asian trade day as the expected hike by Fed in interest rates dampened the market sentiments. Meanwhile, desperation was evident in some Indonesian sellers as traded level continued to slide, while the Thai sellers opted to offer a mixture over prime rubber to secure better margins; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1330/mt FOB Belawan/Surabaya, down US$5, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, down US$5, and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, steady, on September 22, 2022.

Amid the downcast demand, the Indonesian sellers were seen adjusting their offers to keep the volume moving. As a result, the traded level for December shipments of SIR 20 was at US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya. Market participants were skeptical of the feasibility and sustainability of the current level as the Indonesian producers are selling at a loss. “Someone has to give in,” said a Singapore-based source.

The producers adjusted their offers during the day with bearish short-term market expectations. “ (We) Expect no change for the foreseeable future,” said a producer source.

The Thai seller, on the other hand, continued to hold on to the offers despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped to US$1330/mt FOB Bangkok/Laem Chabang. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber.

The pressure was also seen building on the African front, with trade for AFR 10 into China reported at US$1280/mt CIF China. Even though there has been some price correction, some African producers are unwilling to buck down. “Offers from factories are still coming in high,” said a trader source. Meanwhile, according to the producers, in an attempt to adhere to their fair price commitment, they cannot benefit from the raw material price correction, limiting the scope for lowering the offers.

The market is under duress given the economic strains, with the Fed widely expected to raise rates by 75 basis points taking the terminal rate to reach 4.6%, and fears of a nuclear conflict with Russia brewing. Even though Japan and China held on to their dovish take, the market cues remain bearish to volatile. However, some up in the oil prices, backed by a prospect of higher Chinese demand and geopolitical risks, capped the price crash.

Mixed trend for spot rubber on mixed global cues

The spot rubber prices remained mixed during the Asian trade day as the market activities remained muted ahead of the Fed's decision. Meanwhile, some uptick in Chinese sentiments kept the market moving, especially for Thai rubber; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, down US$5, Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang, up US$2.5 and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, down US$5, on September 21, 2022.

The Thai seller continued to hold on to the offers while the downcast sentiments led to the widening of the bid and offer gap. Offers for October and November shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest was at US$1345/mt FOB Bangkok/Laem Chabang. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the Indonesian rubber market was largely flat, with traded level for November to January shipments of SIR 20 hovered in the range of US$1335- US$1340/mt FOB Belawan/Surabaya. According to market sources, the market fundamentals are weak at the moment. However, some uptick in the Chinese sentiments around Congress has kept the market rangebound. "It's a flat forward curve now," said a Singapore-based source.

On the African front, the raw material prices saw a massive correction this month. However, in an attempt to adhere to their fair price commitment, some producers cannot benefit from the price correction. According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In addition, there is a glut situation in the African market, given there was around a 50%-70% reduction in LTCs for the rest of 2022, which weighed on spot rubber prices.

Meanwhile, the market remained cautious as Russian President Vladimir Putin announced a partial military mobilization while the market awaited an aggressive Federal Reserve hike in interest rates. As a result, the market sentiments remained dampened, muting the market activities.

China & Japan’s dovish policy supports spot prices

The spot rubber prices traded slightly higher during the Asian trade day as dovish policy guidance from China and Japan lent some support coupled with renewed interest for the forward cargoes. However, the market is likely to remain mixed for the week, especially with Fed announcing the interest rate hike later in the week; sources said Helixtap on Tuesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1340/mt FOB Belawan/Surabaya, up US$5 Standard Thailand Rubber (STR) 20 at US$1347.5/mt FOB Bangkok/Laem Chabang, up US$7.5 and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, steady, on September 20, 2022.

“It seems that market is pretty well supported today,” said a producer source. The traded level for December shipments of SIR 20 is in the range of US$1335- US$1345/mt FOB Belawan/Surabaya. This was largely driven by the Bank of Japan’s indication to maintain ultra-low interest rates and China’s decision to keep its benchmark lending rates unchanged. The inflation in Japan hit an 8-year high at 2.8% in August amid soaring energy prices.

As a result, market experts believe that the jump in the market is likely to be short-lived as it is mostly sentiment driven rather than actual demand. Meanwhile, developed markets like the US and England are likely to hold onto their hawkish rate hike intentions. The divergence in the policy decisions globally kept the US dollar firm, further supporting the spot prices during the day.

Meanwhile, Indonesian rubber continued to remain competitive in the market with Indo-Thai premium as of September 20, 2022, at negative US$7.5 as STR 20 for December shipment was priced at around US$1355/mt on FOB basis. However, some market sources believe the prices might be nearing the floor now as “the SIR 20 premium is already very low”.

Meanwhile, the African rubber struggled to find a market in the Asian market amid muted demand from Europe and US. Moreover, there was some resistance from the sellers to lower their offers as they tried to maintain their margins. According to trader sources, they find it challenging to move cargoes to China. “The offers are around US$1300/mt to US$1340/mt on CIF basis to China depending on factories. The issue is that factories are unwilling to reduce their price,” a trader source explained.

Spot prices retreat, sellers offer forward

Rubber spot prices traded lower during the Asian trade day resulting in a weak opening for the week following some retreat in Shanghai futures Exchange and broadly negative cues from global markets last week. However, there seemed to be some forward interest, especially for Indonesian rubber, propping the buyers to offer forward; sources said Helixtap on Monday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, Standard Thailand Rubber (STR) 20 at US$1340/mt FOB Bangkok/Laem Chabang, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, all down US$5, on September 19, 2022.

While the overall sentiments remained bearish, some retreats in the Shanghai futures Exchange added to the price pressure. "I won't be optimistic since SHFE retraced a bit," said a Singapore-based source. The buyers and sellers were cautious while they await the US Fed's monetary policy decision later in the week.

The traded level for November and December shipments of SIR 20 in the range of US$1330- US$1340/mt FOB Belawan/Surabaya, while forward offers were around US$1355/mt on FOB basis with a buying interest hovering between US$1335- US$1345/mt on FOB basis. The lower-than-expected levels in the spot market have pushed buyers and sellers to book forward cargoes. "Everyone trying to roll their SIR longs forward as there are no buyers for the nearby," a trader source added.

However, there was some buying interest from China amid the sliding price. Trades for October and November arrival shipments were reported in the range of US$1355-US$1380/mt on CIF basis. Some sellers noted that selling "Normal China or mixture" Thai rubber into China is better.

This has priced out African rubber into the Chinese market. According to market sources, it is "tough for African cargo to work" at the current price level. The buying interest from India also remained subdued, with the bid level at around US$1100/mt on CIF basis.

Meanwhile, some easing in the Covid lockdowns across China might support the prices. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Fundamentals lead the way in a mixed trend week

(16 Sep) Prices clung on to previous day’s levels for most grades indicating weaker demand and the end to most traders short covering activities which lended support in the market.

Thai raw material prices finally catch up to impact of rainy weather

Despite heavy rain in some parts of Thailand, raw material prices took awhile to catch up. This week prices of Thai raw material rose up 3 THB/Kg week on week. Helixtap assessed Thai raw mat at 41 THB/Kg. However, some producers we spoke to noted that “raw materials were plentiful and that the rains were limited to the Northeastern parts and not so much in the South”. This may keep a lid on price increases and “normalcy” may resume with Indonesian rubber having a premium vis as vis Thai Rubber.

Indonesian raw material also saw a spike week on week. Some producers noticed some bigger processors buying at a much higher level than the market, at 19,000 IDR/Kg. Helixtap assessed Indo raw mat at 18,500 IDR/Kg. Other processors have reduced purchasing and output of their factories amidst low premiums.

Indonesian reaches attractive levels, interest seen further out till Mar 2023

This week Indonesian rubber traded at a discount to Thai rubber, averaging 20 USD/MT lower. The lower premium of Indonesian indicates a weaker international market demand environment. Today, the gap narrows to just 5 USD/MT. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. 
 

This week Korean buyers were active in the market for Thai grades. Helixtap assessed STR20 1,345 USD/MT  FOB Bangkok Laem Chabang.
 

Bulk latex from Thailand also rebounded a little, with China restocking and the impact of some factories in Rayong being impacted production wise. Helixtap assessed Bulk Latex FOB Bangkok 1,010 USD/MT. 

Indonesian levels look to have reached a “value” play as buyers were seen looking for Jan - Mar 2023 cargoes. Traders and consumers were looking to lock-in these levels as some rumours of some consumers “returning to the spot market soon” spiked interest. Bids were seen at USD/MT 1,350 FOB Bel Sby for Jan-Mar 2023 cargoes. However, some traders Helixtap spoke to hypothesized, “Perhaps someone has cornered the Jan or Q1 contract. Despite oversupply issues vs demand and SIR trading at a discount to STR”.
 

EU demand remains weak, African sellers flock to China

Europe and US buyers were largely absent from the market leaving African sellers active in the Asian markets. Helixtap assessed AFR10 1,305 USD/MT CIF Hamburg Rotterdam. African cargoes were seen being offered 1,310 - 1,320 CIF China main ports for Nov arrival this week. Whilst SMR20 Mixture and STR20 Mixture were offered 1,365 - 1,370 CIF China main ports. Large buying by traders in China were seen at this range - Helixtap assessed CIF China 1,360 USD/MT CIF China. 
 

Indo- Thai scuffle continues

The scuffle between the Indo and Thai rubber continued keeping the spot prices mixed during the Asian trade day amid a slow demand. However, the market is skeptical about how long the Indonesian producers can hold on to their competitive edge in the market; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1340/mt FOB Belawan/Surabaya, up US$5, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, down US$10, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$ 5, on September 15, 2022.

There was some correction in the Thai offer level during the day, indicating the Thai producers’ attempt to stay competitive in a downcast market. This added to the pressure on the prices as well as market sentiment. The offers for October and November shipments of STR 20 were in the range of US$1350- US$1360/mt FOB Bangkok/Laem Chabang, with the buying interest at US$1340/mt on FOB basis.

However, Indonesian rubber continued at a discounted level to Thai rubber, even though the Indo-Thai gap narrowed to a negative US$5. “There are plenty of sellers for SIR 20 now,” said a Singapore-based source. The traded level for November to January shipments of SIR 20 was in the range of US$1340- US$1345/mt FOB Belawan/Surabaya, while offers were around US$1340/mt on FOB basis.

The overall market sentiment was sluggish, with some appreciation in the US dollar. In addition, the possibility of a further hike in global borrowing costs kept the buyers cautious. The broader focus, however, remained squarely on the risk of rising interest rates and painfully high energy prices causing recessions.

Aggressive Indo offers widen Indo-Thai premium

The aggressive stance of the Indonesian producers widened the premium between Indo-Thai prices during the Asian trade day as some sellers tried to liquidate to ease the oversupply in the market; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, down US$15, Standard Thailand Rubber (STR) 20 at US$1355/mt FOB Bangkok/Laem Chabang, down US$5, and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, down US$ 5, on September 14, 2022.

Indonesian rubber continued to trade at a discounted level to Thai rubber for two consecutive days, indicating the aggressive stance of the Indonesian producers. Some attributed the reversal in premium to oversupply in the Indonesian market; thus, the producers are in a rush to move volume.

Indonesian producers have seen some setbacks amid consistent negative margin pressure coupled with an oversupply of raw materials due to imports from Africa. However, with some corrections in the raw material prices, the producers have some room to adjust the prices. According to market sources, Indonesian raw material is around IDR 17,800/kg ex-works.

"I think Indonesian shippers are sick and tired of the Thais taking our market share......so time to fight," a producer source noted. The traded level for November and December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while offers were around US$1340/mt on FOB basis. "Heard SIR 20 got many sellers in the market today," a Singapore-based trader said.

Indonesian rubber is at a negative US$20, lower than the previous day. According to Helixtap data, the Indo-Thai gap peaked at around US$125 in early May and dropped to a negative US$25 in early March this year.

Meanwhile, the Thai producers held on to their offer despite overall bearish demand cues. Offers for Q4 shipments of STR 20 were in the range of US$1360- US$1380/mt FOB Bangkok/Laem Chabang.

The unexpected higher US consumer prices in August and continued underlying inflationary pressure shook the market confidence. As a result, the market would not wait for the Federal Reserve's move, which according to the market, is likely to be around a 75 basis points interest rate hike for the third time. This outlook boosted the US dollar, which also impacted the rubber market. 

Indo-Thai premium reversed, long-term support doubtful 

The spot prices found some support with a reversal in the premium of Indo-Thai price during the Asian trade day amid some positive global cues and short covering coupled with some weakness in the US dollar. However, the market participants remained cautious amid overall weakness in the market fundamentals; sources said Helixtap on Tuesday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1350/mt FOB Belawan/Surabaya, up US$15, Standard Thailand Rubber (STR) 20 at US$1360/mt FOB Bangkok/Laem Chabang, up US$45, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$ 15, on September 13, 2022.

Some market sources attributed the price support to some short covering, while others believed that some positive macro-economic indicators boosted the sentiment. "Seems to be macro, US dollar weaker, some positivity in China. There will be a lot of shorts in the market. If this is a squeeze, it could run for a few days," a trader source said. A Singapore-based source noted that it seemed like a short covering propped the prices up. However, there was a drop in open interest.

"Some relief in the market today," the trader source noted as the traded level for prompt STR 20 was at US$1360/mt FOB Bangkok/Laem Chabang and for November and December shipments of SIR 20 at US$1350/mt FOB Belawan/Surabaya.

There was a switch in the premium between the Thai and Indonesian rubber, with Indonesian rubber at a negative US$10 for the first time since February earlier this year. According to the producers, the premium for Indonesian rubber is almost gone. 

As the market awaits US consumers' inflation data, the expectations of some drop lent some support to the market confidence. In addition, industry experts also expect a slowdown in headline CPI given the correction in oil and other commodity prices. Furthermore, there are talks of the possibility of Beijing raising stimulus to cap the slowdown in economic growth. 

However, the core fundamentals still are weak, which would deter a rebound in the market. According to market participants, unless there is a strong pick-up in demand, it would be tough for any support to hold for long.

Meanwhile, according to market sources, some African producers were skeptical of offers amid the existing volatility. An offer for AFR 10 at US$1400/mt CIF India, did not find any counter buying interest. However, there has been a slight uptick in demand for African raw materials from Malaysia amid heavy rains in Thailand, which is impacting the shipments.

Buyers sidelined on weak global cues

Extended holiday in China amid a downcast previous week kept the buyers away from the market during the Asian trade day as the spot prices treaded sideways; sources said Helixtap on Monday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, Standard Thailand Rubber (STR) 20 at US$1315/mt FOB Bangkok/Laem Chabang, and African Rubber (AFR) 10 at US$1285/mt CIF Rotterdam/Hamburg, all unchanged from September 09, 2022.

The market sources noted that the market was extremely quiet amid holidays in China and South Korea, and the offers were also limited. Meanwhile, other markets were largely sidelined ahead of the US inflation release. As a result, there is caution among the buyers while sellers too took it slowly during the day. 

The offer level for SIR 20 was at US$1340/mt FOB Belawan/Surabaya for December shipments, while the offers for prompt STR 20 were at US$1360/mt FOB Bangkok/Laem Chabang. “Today very quiet. Generally, consumers are sidelined,” said a Singapore-based source. The Chinese demand is like to remain muted amid lockdowns.

Meanwhile, continued pressure on the prices has led to more shutdowns of Indonesian factories. “Some more factories are stopping production for a few days to weeks due to low demand,” the Singapore-based source added. According to industry experts, as of now, there are some shutdowns in Pontianak. However, if the bear demand continues, Palembang factories will be impacted. 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here.

Quiet end to the week, with market participants expecting the worse to come 

(09 Sep) The week ended off overall down, albeit slightly, unlike the large week on week drops the market experienced in August. 

Rainy season and floods in some parts of Thailand fail to raise prices 

Thailand sellers continued to remain aggressive today, despite heavy rains and flash floods reported especially in the East of Thailand. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang. Some producers Helixtap spoke to say that such aggressive offering “means that traders are taking a risk as they are holding high cost stock. As Thailand moves in to the rainy season now, it is unlikely they will be able to get access to raw material below 40 THB/Kg.” Helixtap assessed Thai Raw Mat 38 THB/Kg. This is the lowest level it has been in a year. This week raw material prices ranged from 37.50 - 39 THB/Kg, and based on our regional analysis, East and South Thailand were the most impacted by rains, whilst getting raw material volume in NorthEast of Thailand was not an issue. 

Latex below 1,000 USD/MT for the first time in a year

Helixtap assessed Bulk Latex FOB Bangkok 990 USD/MT. Like Thai raw material, this is the lowest level it has been since a year, and China has been largely absent from the market. Some Latex suppliers Helixtap spoke to mentioned “One of our factories in East Rayong was under water due to flash floods and will be out of action for approximately 3 days.” 
 

Looking at Indonesia, some big factories saw raw material prices go below 18,000 IDR/Kg this week. Helixtap assessed Indo Raw Mat 18,000 IDR/Kg. Producers we spoke to mentioned “things are not looking great as we see low supply, low demand, everything is low!”. Helixtap assessed SIR20  1,335 USD/MT FOB Belawan Surabaya. 

Prices following demand (or lack of) entirely

As China headed off to their long weekend for the Mid Autumn Festival, prices remained largely unchanged. Traders Helixtap spoke to commented, “as long as the demand shows no sign of improvement, the price will remain weak. It does not matter how much the supply is affected now.” Helixtap assessed CIF China 1,330 USD/MT CIF China. Many offers were seen around 1,350 - 1,460 USD/MT this week, with Sep arrival prompt cargoes still available at 1,320 - 1,330 CIF China.  

African demand was not spared but slowed its price decline. Offers for AFR10 in to China were seen at 1,280 - 1,290 today. On the Europe front, Helixtap assessed AFR10 1,285 USD/MT CIF Hamburg Rotterdam. Most people Helixtap spoke to echoed the elephant in the room - demand - coupled with decent production levels and prompt cargoes aplenty leave the market awash with sellers for a while. From a technical standpoint, some support levels have been reached, but fundamentals have not changed.
 

Typically, the September and October period is China’s highest demand and the market will be looking to China to come back hopefully sooner rather than later.

Sellers heave a sigh of relief with prices stable today

(08 Sep) Sellers finally got a break from the downward momentum in prices today, with spot rubber market trading at almost the same levels as yesterday. 

Roll of the dice: Support level or Short Seller Covering?

Chinese traders were rumoured to be short covering after almost 2 weeks of sharp drops. This is in line with Helixtap’s technical analysis of the support level at 1,250 USD/MT. This movement looked like people “cashing out” before the support levels. Producers  Helixtap spoke to were hesitant to view this level as a support as fundamentals have not changed. 

Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya, which was unchanged to the previous day. Helixtap assessed STR20 1,320 USD/MT FOB Bangkok Laem Chabang which was also unchanged day on day. 

Quiet Market: Buyers Proceed with Caution

China grades were well offered with prompt Sep cargoes all the way to Jan arrival cargoes. Offer prices ranged between USD/MT 1,340 - 1,360 for STR20 Mixture CIF China. However, buying continued to remain muted with some buyers choosing to “wait for a lower price further out”. 
 

On the African origins, sellers had to adapt to lower premium markets and this has led to African assessed AFR10 physical prices to show a drop of -260 USD/MT from August 1 2022 to date. Helixtap assessed AFR10 AFR10 1,290 USD/MT CIF Hamburg Rotterdam. 
 

Taking a look at the table, these are the month on month changes of Daily Helixtap Assessed Physical Rubber:

Source: Helixtap

Prices continue to fall, producers have some reprieve with weak domestic currencies

(07 Sep) Sellers took matters into their own hands by being more aggressive today in the rubber spot market. Given a strong bearish sentiment amongst many, and weak demand signals as well as a strong USD, most producers were keen to lock in sales today.

Weak Emerging Market Currencies allow for some margin

Looking at some of the major currencies, weakening emerging market currencies helped processors a little, especially in Thailand. This could explain why many Thai sellers were leading the pack in finding home for cargoes. Thai raw materials were also seen below 40THB/Kg, offering processors a little bit of respite. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang.

Some producing regions currencies:

• IDR/USD was close to 15,000 today, which is the highest since last year.
• THB/USD crossed 36 today, at 36.72 which is the highest in 5 years.
   

Meanwhile on the demand front, China’s Yuan was comparatively weaker, amidst sustained lockdowns and some Chinese banks reeling from failing property loans.

• RMB/USD almost touched 7 today, which is close to 2020 at the start of the COVID outbreak.
• China’s central bank (PBOC) intervened earlier this week by reducing the amount of foreign currency banks needed to hold. 
   

China’s reduced buying power for imports continued to be one of the major factors in the sharp dip in prices week on week. CIF China cargoes were seen traded at 1,320 - 1,330 USD/MT for prompt Sep arrival. Further out, there was some reprieve with trades reported at 1,340 USD/MT.
 

Looking back last week, Helixtap weekly assessed STR20 Mixture CIF China on 2 Sep 2022 at 1,370 USD/MT. This represents a dip of about USD50/MT with more downward pressure.

Vietnam bucking the trend 

Vietnamese producers who mostly ship to China were seen to be either sidelined or holding on to much higher prices. For example SVR10 was offered at USD/MT 1,380 - 1,390 FOB HCM today for Nov loading. A Vietnamese producer Helixtap spoke to said, “Whilst there seems to be an aggressive sell off by Thai producers, Vietnamese producers abstained from the market or chose to ignore the trend.” A wide range of offers were seen, with dealers following the trend and offering in line at 1,350 CIF China for SVR10 Nov arrival. 
 

Aggressive sellers, hunting for buyers

With demand pressures abound - all 3 of Helixtap’s daily assessed prices saw a day on day drop. AFR10 prices saw the biggest dip -30USD/MT from the previous day. This is probably due to their biggest exposure and reliance on EU and US markets. Some processors were forced to adapt and move cargoes to more price-sensitive China and India markets. Helixtap assessed AFR10 1,280 USD/MT CIF Hamburg Rotterdam. This is also the traded value for AFR10 CIF China main ports, Nov arrival.

Today, Indonesian processors were also seen to be more willing to lock in sales probably due to lowering raw material costs as well as the strong downward trend. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. The differential between SIR20 and the futures price is +60 USD/MT, which according to Helixtap data is the same differential in the month of Jan 2021. Looking back historically, the following month (Feb 2021), the differential between futures and Indonesian physical dipped to the lowest that year, at +37 USD/MT, before rising again.
 

"It seems to be an every man to themselves moment", said an Indonesian producer Helixtap spoke to. This is in reference to no government support, some consumers tightening African import tolerance and aggressively priced Thai grades. 

Based on Helixtap's technical analysis last week support levels for futures was at 1,250 USD/MT. This may be tested again given the weak global fundamentals. 

Prices slide again, sellers continue to face more pressure

(06 Sep) After a flat start to the week, prices continue their slide today with all grades across the board facing pressures as sellers look to any buyer for a bid. 
 

Indonesians provide bargain trade armed with African imports

Indonesian sellers faced a -35 USD/MT dip day on day with Helixtap assessed SIR20 1,355 USD/MT FOB Belawan Surabaya. Sellers started offers at USD/MT 1,380 FOB Belawan Surabaya but capitulated to the bids at USD/MT 1,355. Sellers of non Indonesian grades said “Indonesian suppliers are finally competing with Thai suppliers, although everyone is hurting at these levels.” 

Given the recent influx of African raw material to Indonesia, some major consumers have told producers that they would black list producers who were using African rubber imports. Tyre majors Helixtap spoke to cited “sustainability and reducing carbon footprint” as their main rationale behind this. Indonesian producers Helixtap spoke to had differing opinions. One of the Indonesian suppliers based in Singapore said, “They are expecting us to fight with hands behind our backs' ', alluding to the negative margin that has plagued Indonesian processors this year. Based on our analysis, it would be difficult to measure and implement, and ultimately a risk a supplier may take depending on the levels the market would trade at.

At these levels, Indonesian grades seem to be at a level for value and bargain buyers. Vietnamese grades which typically trade at a discount to Indonesian were seen offered at USD/MT 1,400. Malaysian grades were also being offered at USD/MT 40 - 50 higher than Indonesian grades. 
 

Thai sellers rush to offload, look to RAOT 

Helixtap assessed STR20 1,335 USD/MT  FOB Bangkok Laem Chabang. Thai producers and traders Helixtap spoke to said “Market seems to be falling like a stone”, whilst others alluded to “some government intervention by RAOT, as farmers cannot make ends meet at these levels.” 

African sellers feel the heat

Helixtap assessed AFR10 1,310 USD/MT CIF Hamburg Rotterdam. Offers were met with few and far between bids as buyers probably took this chance to focus their attention on higher or prime grade material. On a day on day basis, African origin faced the biggest drop of -40 USD/MT. An African producer said “Our prices have unfortunately slipped well below the futures prices and at a discount now. When the prices dip too fast, it is very tough for the producers.”

General malaise in global demand means sellers continue to face pressure 

With Germany already implementing a plan to save energy and cushion an energy crunch in the winter months, Europe has been quiet and tyre majors seem to have enough buffer of existing stock. South Asian tyre manufacturers were also well stocked. 

Buyers sidelined on weak global cues

The spot rubber market steadied amid muted activities during the Asian trade day as the buyers' side lined anticipating more correction in the prices amid a hike in oil prices and more lockdowns in China; sources said Helixtap on Wednesday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1390/mt FOB Belawan/Surabaya, up US$5, and Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1350/mt CIF Rotterdam/Hamburg, both unchanged from September 02, 2022.

While the price stabilized a bit during the day, after two weeks of consecutive free fall, it was largely driven by the absence of buyers rather than prices seeing some support. According to market sources, the market is very quiet now, with some of the major buyers out of the market. 

The traded level for SIR 20 was at US$1390/mt FOB Belawan/Surabaya for November shipments, while the offers for prompt STR 20 were at US$1370/mt FOB Bangkok/Laem Chabang. The Chinese continued to remain muted. The fresh set of lockdowns across mainland China has weighed on the sentiments. However, there were some offers for African rubber into China at around US$1330/mt on CIF basis, while the bids remained limited. 

Further adding to the downcast view, Japanese services sector activity shrank in August, for the first time in five months, triggered by the resurgence of COVID-19 infections. Japan being a key rubber buyer, a drop-in services activity coupled with a decline in manufacturing is likely to take a toll on the spot rubber demand. As a result, the market sources expect the prices to see more correction. In addition, the surge in oil prices also impacted the market sentiments amid the anticipation of a possible cut in oil production. 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Heavy rain forecasts in Thailand drive raw material prices north

Reports of heavy rains in Thailand have driven the raw material prices up during the week as the market experts see some more support amid the expectation of weather to worsen. The situation amped up the spot rubber prices as the Chinese buyers continued to remain bullish, expecting a supply shortage.

“With the Thai flooding news, Chinese are slightly more bullish and taking note of the flood,” said a Singapore-based trader. Even though Thai raw material prices saw a marginal rise over the week, the market expectation is that the prices are likely to remain northbound in the coming week, amid the forecasts of another storm in the first week of October.

“Had a lot of rain this week. Some provinces are flooded. Even Bangkok is under flood threat,” said a Thailand-based source. Some market participants feel this could be a much-needed breather for the spot prices as the weather disruption clubbed with the restocking in China.

According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. The prices for Thai raw materials ranged between THB 39-THB 44.5/kg ex-works. The market, however, remained divided on the extent of the impact of the rains.

Some strength was seen in the Indonesian raw material prices as well. While the raw material prices have surged on some firm buying interest, there is some ambiguity about the factories still producing in the region. According to market sources, owing to continued pressure on  prices, some Indonesian factories are “on shaky ground” or even have shut down.

Helixtap assessed Indonesian raw material was assessed at IDR 18,400/kg, up IDR 350, and Thai raw at THB 41/kg, up THB 1.5 over the week.

However, the market was slightly slow for latex despite some buying interest from China in the TSR market. Market sources noted that China was a very active buyer last week. However, this week, Chinese buyers for latex are relatively quiet. “There hasn’t been much activity apart from a few sporadic buying,” the Thailand-based sources added. Helixtap assessed Thai Latex Bulk was assessed at US$ 9250/mt FOB Bangkok/LCB, down US$75, over the week. 

TSR upbeat on China 

Chinese buyers were snapping up cargoes this week, with the buying frenzy continuing across the curve. The buying interest was seen across many grades. "I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter," a China-based trader said earlier this week.

Thai sellers were seen preferring sales to China due to less stringent requirements and with current supported CIF China levels. According to market sources, some producers buy raw materials to fulfill the forward bookings. With China's demand seemingly back in the market, this could be the turning point and start of some upward price movement. However, some market participants are skeptical of the rebound to sustain.

With some expectations for support post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending would add to the market's bearishness, prompting the government to provide more economic stimulus.  

For STR20 Mixture, the prices spot market was seen in the range of US$1370- US$1375/mt CIF China main ports for October and November arrival. However, for forward cargoes, the range was at US$1380 – US$1390/mt CIF China. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$1375/mt CIF China, steady over the week.

Indo still competitive in international market 

While China did bring in some optimism in the market, the international market continued to remain sluggish, capping the rise in the spot market. Meanwhile, Indonesian rubber continued to remain the economic alternative for international buyers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while for the forward months was a bit higher at US$1350/mt FOB Belawan/Surabaya. The Indonesian market seems to be in a contango with most buyers and sellers active in the forward month bookings.

"There are no international buyers since SIR offered at par with SICOM. So, all buyers moved to buy SIR," a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR, or mixture.

African sellers were seen offering very competitive prices at US$1300 – US$1310/mt CIF China main ports as some African producers needed to liquidate volume, as per market sources. On the European front, the buyers continued to remain cautious, which explained the aggressive offering into China but followed the rest of the market on a slight upward trend.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, steady, Standard Thailand Rubber (STR) 20 at US$1352.5/mt FOB Bangkok/Laem Chabang, down US$7.5, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, steady, on September 30, 2022.

Spot prices firm on bullish China

Spot rubber market found some support amid rain reports in Thailand, making the Chinese buyers bullish as they continue to restock before the Golden Week holidays. A trickle effect was seen across the board; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, up US$10, Standard Thailand Rubber (STR) 20 at US$1360/mt FOB Bangkok/Laem Chabang, up US$10, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, up US$5, on September 29, 2022.

“It’s raining in Thailand, so China is a bit bullish,” said a Singapore-based trader. According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. While some Thai producers held back their offers to assess the actual market level, Indonesian producers increased their offers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while the buying interest for the forward months was a bit higher at US$1345/mt FOB Belawan/Surabaya. The Indonesian market seems to be in contango with most buyers and sellers active in the forward month bookings.

The market, meanwhile, remained divided on the extent of the impact of the rains in Indonesia. While some noted that there are still a lot of offers for Thai rubber in the market, SIR continued to be the more economical option for international.

“People expect the market to go lower, so dumping the stock. And SHFE seems better supported with sentiments around China congress,” said a producer source. Meanwhile, the buying interest remained limited for African rubber, with some sellers struggling to match the buying expectation. A trader source noted they received a bid at US$1250/mt CIF China. “But it is not workable with factory,” he added.

With some expectation post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending adds to bearishness in the market, which, however, might prompt the government to provide more economic stimulus.

Competitive Indo rubber prices restricted Thai to China

Thai rubber producers opted to sideline or offer into China as buyers opted for the economical Indonesian rubber during the Asian trade day. Meanwhile, there seemed to be some concerns around the sustainability of the recent support to the market amid restocking from China; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1325/mt FOB Belawan/Surabaya, down US$10, Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang, steady, and African Rubber (AFR) 10 at US$1305/mt CIF Rotterdam/Hamburg, down US$5, on September 27, 2022.

“There are no international buyers since SIR offered at par with SICOM. So all buyers moved to buy SIR,” a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

However, given the recent restocking in China ahead of the Golden week holidays, the Thai producers seemed content just offering into China, with sources noting that some might be overbooked for the first quarter of 2023. According to market sources, some producers buy raw materials to fulfill the forward bookings.

While this seems to be bringing in some optimism for the spot and futures market, there is still some anticipation around the sustainability of the uptick. “This is their pre-long holiday buying. I heard after the one-week holiday, some China factories would extend their shutdown for maintenance and repair reasons. Also hearing about mid of next month election and may impose measures to reduce pollution,” a Singapore-based source noted. This does cast a shadow on the mid-term market sentiment.

On the other hand, the Indonesian prices continued to remain volatile with some correction in the prices today. The appreciation in the US dollar did cap the slide, but the Indonesian producers seemed willing to adjust the prices to keep the volume moving. The traded level for December shipments of SIR 20 was at US$1325/mt FOB Belawan/Surabaya, while the buying interest was at US$1315/mt FOB Belawan/Surabaya.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. “Yes, we have seen freights drop from Indo as well,” said another producer source. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR or mixture. “Need to compare freight rates too. Compare landed cost,” the trader source added.

Meanwhile, trades for STR 20 mixture were reported at US$1380/mt on CIF basis in China. Therefore, the market feels the momentum might carry forward provided the Chinese yen sees some appreciation against the US dollar.

Chinese demand strong, right before Golden Week

(27 Sep) Chinese buyers were seen snapping up cargoes this week, with the buying frenzy continuing all across the curve. The buying interest was seen across many grades. For STR20 Mixture, prices for spot were seen at USD/MT 1,370 CIF China main ports for Oct and Nov arrival. For further out cargoes, the range was USD/MT 1,380 - 1,390 CIF China.

Gap narrows between Indonesian and Thai Grades

Helixtap assessed SIR20 FOB Belawan Surabaya 1,335 USD/MT whilst Helixtap assessed STR20 FOB Bangkok Laem Chabang 1,350 USD/MT. The gap has since narrowed to 15 USD/MT, with some Indonesian producers hoping for a rebound, and holding back offers. 
 

Others used the slight rise in levels to lock in sales, as they believe “demand recovery will take some time” with many trades done between 1,330 - 1,340 USD/MT. Sellers for Q12023 for Indonesian grades reflected the uptick by increasing their offers to USD 1,360 - 1,370 FOB Belawan Surabaya.
 

African sellers aggressively selling in to China

African sellers were seen offering very competitive prices, USD/MT 1,300 - 1,310 CIF China main ports. Based on sources Helixtap spoke to, these also include large African producers who seemed like they needed to sell volume. On the European front, buyers continue to remain cautious, which explains the aggressive offering into China but followed the rest of the market on a slight upward trend. Helixtap assessed AFR10 CIF Hamburg Rotterdam 1,310 USD/MT.
 

Some Chinese traders Helixtap spoke to said, “I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter.”
 

Thai sellers have been preferring sales to China due to less stringent requirements, and with current supported CIF China levels, the FOB netback is almost the same as international grade i.e. USD/MT 1,345. 

Golden Week - the turning point?

With China demand seemingly back in the market, this could be the turning point and start of some upward movement in prices. 

Looking at SHFE stockpiles, they remain stable but recent demand activity could indicate a few things:

• Weaker RMB means Chinese traders have prioritized RMB trades, and are looking for ex warehouse deals.
• With the rest of the world removing the last of COVID restrictions, it could be a sign traders are expecting China to follow suit after Golden Week holidays.
• Prices have hit a technical support level and at these attractive levels, buyers are willing to lock-in purchases all the way out to March 2023

Widening premium gives Indonesia rubber the edge

With the spot market essentially treading sideways, Indonesian spot prices continued to slide during the Asian trade day, widening the Thai-Indo premium, giving it a competitive edge in the market after almost six months of lull; sources said Helixtap on Monday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1312.5/mt FOB Belawan/Surabaya, down US$15, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, steady, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$5, on 26 September, 2022.

The market sentiments remained extremely bearish owing to the negative cues, which continued to weigh in on prices. In addition, while most central banks worldwide continue to hike interest rates to tackle inflation, the concerns about the global growth outlook have been increasing.

The Indonesian producers, however, were seen adjusting their offers and willing to correct further for a serious bid. The traded level for November and December shipments of SIR 20 were in the range of US$1310-US$1315/mt FOB Belawan/Surabaya. However, some producers said they could lower further, “We’d probably sell at 130 if bid”.

While this widens the gap between the Indonesian and Thai rubber, it is impacting Indo producers’ margins significantly. “(Margin) that word has not been in an Indo shippers vocabulary for a good three months,” a producer source added.

Meanwhile, the Thai producers held on to their offers amid minimal interest, widening the gap between SIR 20 and STR 20 to negative US$32.5/mt as of 26 September 2022, while the average for the month is around US$3/mt. This has piqued some interest for Q1 shipments. Offers for October to December shipments of STR 20 were priced at around US$1380/mt on FOB basis.

The African rubber market was largely muted as the producers held on to their offers, and no interest from buyers limited the market activities. “Not much is happening. No bids from customers neither offer from factories,” a trader source noted. The producers have been holding offers in the range of AU$1330-US$1350/mt on CIF basis since mid-September. 
 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Spot activity moves forward, prices close to floor

The shift in the buying pattern during the week despite underscored expectations for tighter monetary policy and a slowing global economy could indicate that the spot prices are finally nearing the floor. The market, however, remained divided on the rationale behind the shift in the buying pattern, with some attributing it to possible positives in the upcoming China congress while others feel the prices have very little room for correction. 

While the overall sentiments remained bearish, with expected Fed hike, building inflationary pressure, and Russian President Vladimir Putin's announcement of partial military mobilization, the market activity shifted from prompt to forward months. 

The situation could be deemed as unusual as for the past few years, with the outbreak of Covid followed by some rebound coupled with a series of black swan events, the instinctive move has been to book as prompt as possible. While some sources tagged the current situation as a "crazy market," the possible explanation could be the prices are closing in now, and the buyers believe in the same. 

Some markets, like Indonesia, have seen a challenging year amid almost a year of negative margins and a considerable inflow of African raw materials. As a result, prices tumbled down. According to Helixtap data, Indonesian producers are seeing a negative margin of 4.1% as of September 23, 2022. The traded level for November and December shipments of SIR 20 continued to remain downcast, closing the week at US$1325- US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya.

"Don't hope for too much more down. Low prices mean all sellers' margins are reduced," said a producer source indicating that the prices are possibly nearing the floor. At least for Indonesia, the current glut is primarily triggered by the cancellation of LTC and massive African imports. According to market sources, around a 50%-70% reduction in LTCs for the rest of 2022 is weighing heavily on spot rubber prices.

During the Asian trade day, the prices remained largely stable, closing the week at a more or less stable now. Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1327.5/mt FOB Belawan/Surabaya, down US$2.5, on September 23, 2022.

Chinese buying triggered increased activities 

There was some uptick in Chinese buying this week amid southbound prices. However, the interest broadly hovered in the forward months. While this could be a part of the restocking China does before the Lunar New year holidays, which is at the end of January in 2023, some market participants believe the increased activity is due to the anticipation of some positive policy announcement in the upcoming Congress. 

“China super active. Expecting something around China congress. At market level, fundamentals are very weak but China sentiments around the Congress helping keep market at this level,’ said another producer source. According to some market participants, Chinese buyers are bidding till February 2023 as most of the factory stocks for 2022 are sold. “ 

The traded level for October and November arrival shipments was reported in the range of US$1355-US$1380/mt on CIF basis during the week. For January, however, was around US$ 1400/mt on CIF basis. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$13750/mt CIF China, up US$15 over the week.

China’s decision to keep its benchmark lending rates unchanged with some easing in the Covid lockdowns supported the sentiment. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

Pressure on AFR, Thai opts mixture, spot rangebound  

The Thai seller, on the other hand, continued to hold on to the offers for prime rubber despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped over. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber. 

Some sellers noted that selling "Normal China or mixture" Thai rubber in China is better. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the pressure was also seen building on the African front. Even though there has been some price correction, some African producers are unwilling to buck down. "Offers from factories are still coming in high," said a trader source. 

According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In an attempt to adhere to their fair price commitment, some producers cannot benefit from the raw material price correction, limiting the scope for lowering the offers. 

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, both steady, on September 23, 2022.
 

Raw material market mixed

The desperation amid the sellers owing to the downcast demand kept the raw material market southbound during the week. Even though there were reports of rains in parts of Thailand impacting the tapping activities and logistics, the raw material prices continued to remain weak. "There is not much supply of field latex as it's raining in all parts of Thailand," said a Thailand-based source adding the Thai cup lumps prices are around THB395.-THB 40/kg ex-works. However, there was some interest from China for latex bulk, with the traded level at US$1070-US$1090/mt on CIF basis. However, the prices failed to see support. 

Meanwhile, the Indonesian raw material prices also saw a correction, but not to the level the market expected amid the glut. The raw material prices ranged between IDR 17,600- IDR 18,500/kg ex-works. The market participants feel there is hardly any room for more correction, even though some African raw material is still floating in the market.

Helixtap assessed Indonesian raw material at IDR 18,050/kg, down IDR 450, Thai Latex Bulk was assessed at US$1000/mt FOB Bangkok/LCB, down US$10, and Thai raw at THB 39.5/kg, down THB 1.5 over the week.

Fed rate hike weighs on sentiments, spot southbound

The spot rubber prices were southbound during the Asian trade day as the expected hike by Fed in interest rates dampened the market sentiments. Meanwhile, desperation was evident in some Indonesian sellers as traded level continued to slide, while the Thai sellers opted to offer a mixture over prime rubber to secure better margins; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1330/mt FOB Belawan/Surabaya, down US$5, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, down US$5, and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, steady, on September 22, 2022.

Amid the downcast demand, the Indonesian sellers were seen adjusting their offers to keep the volume moving. As a result, the traded level for December shipments of SIR 20 was at US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya. Market participants were skeptical of the feasibility and sustainability of the current level as the Indonesian producers are selling at a loss. “Someone has to give in,” said a Singapore-based source.

The producers adjusted their offers during the day with bearish short-term market expectations. “ (We) Expect no change for the foreseeable future,” said a producer source.

The Thai seller, on the other hand, continued to hold on to the offers despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped to US$1330/mt FOB Bangkok/Laem Chabang. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber.

The pressure was also seen building on the African front, with trade for AFR 10 into China reported at US$1280/mt CIF China. Even though there has been some price correction, some African producers are unwilling to buck down. “Offers from factories are still coming in high,” said a trader source. Meanwhile, according to the producers, in an attempt to adhere to their fair price commitment, they cannot benefit from the raw material price correction, limiting the scope for lowering the offers.

The market is under duress given the economic strains, with the Fed widely expected to raise rates by 75 basis points taking the terminal rate to reach 4.6%, and fears of a nuclear conflict with Russia brewing. Even though Japan and China held on to their dovish take, the market cues remain bearish to volatile. However, some up in the oil prices, backed by a prospect of higher Chinese demand and geopolitical risks, capped the price crash.

Mixed trend for spot rubber on mixed global cues

The spot rubber prices remained mixed during the Asian trade day as the market activities remained muted ahead of the Fed's decision. Meanwhile, some uptick in Chinese sentiments kept the market moving, especially for Thai rubber; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, down US$5, Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang, up US$2.5 and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, down US$5, on September 21, 2022.

The Thai seller continued to hold on to the offers while the downcast sentiments led to the widening of the bid and offer gap. Offers for October and November shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest was at US$1345/mt FOB Bangkok/Laem Chabang. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the Indonesian rubber market was largely flat, with traded level for November to January shipments of SIR 20 hovered in the range of US$1335- US$1340/mt FOB Belawan/Surabaya. According to market sources, the market fundamentals are weak at the moment. However, some uptick in the Chinese sentiments around Congress has kept the market rangebound. "It's a flat forward curve now," said a Singapore-based source.

On the African front, the raw material prices saw a massive correction this month. However, in an attempt to adhere to their fair price commitment, some producers cannot benefit from the price correction. According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In addition, there is a glut situation in the African market, given there was around a 50%-70% reduction in LTCs for the rest of 2022, which weighed on spot rubber prices.

Meanwhile, the market remained cautious as Russian President Vladimir Putin announced a partial military mobilization while the market awaited an aggressive Federal Reserve hike in interest rates. As a result, the market sentiments remained dampened, muting the market activities.

China & Japan’s dovish policy supports spot prices

The spot rubber prices traded slightly higher during the Asian trade day as dovish policy guidance from China and Japan lent some support coupled with renewed interest for the forward cargoes. However, the market is likely to remain mixed for the week, especially with Fed announcing the interest rate hike later in the week; sources said Helixtap on Tuesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1340/mt FOB Belawan/Surabaya, up US$5 Standard Thailand Rubber (STR) 20 at US$1347.5/mt FOB Bangkok/Laem Chabang, up US$7.5 and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, steady, on September 20, 2022.

“It seems that market is pretty well supported today,” said a producer source. The traded level for December shipments of SIR 20 is in the range of US$1335- US$1345/mt FOB Belawan/Surabaya. This was largely driven by the Bank of Japan’s indication to maintain ultra-low interest rates and China’s decision to keep its benchmark lending rates unchanged. The inflation in Japan hit an 8-year high at 2.8% in August amid soaring energy prices.

As a result, market experts believe that the jump in the market is likely to be short-lived as it is mostly sentiment driven rather than actual demand. Meanwhile, developed markets like the US and England are likely to hold onto their hawkish rate hike intentions. The divergence in the policy decisions globally kept the US dollar firm, further supporting the spot prices during the day.

Meanwhile, Indonesian rubber continued to remain competitive in the market with Indo-Thai premium as of September 20, 2022, at negative US$7.5 as STR 20 for December shipment was priced at around US$1355/mt on FOB basis. However, some market sources believe the prices might be nearing the floor now as “the SIR 20 premium is already very low”.

Meanwhile, the African rubber struggled to find a market in the Asian market amid muted demand from Europe and US. Moreover, there was some resistance from the sellers to lower their offers as they tried to maintain their margins. According to trader sources, they find it challenging to move cargoes to China. “The offers are around US$1300/mt to US$1340/mt on CIF basis to China depending on factories. The issue is that factories are unwilling to reduce their price,” a trader source explained.

Spot prices retreat, sellers offer forward

Rubber spot prices traded lower during the Asian trade day resulting in a weak opening for the week following some retreat in Shanghai futures Exchange and broadly negative cues from global markets last week. However, there seemed to be some forward interest, especially for Indonesian rubber, propping the buyers to offer forward; sources said Helixtap on Monday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, Standard Thailand Rubber (STR) 20 at US$1340/mt FOB Bangkok/Laem Chabang, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, all down US$5, on September 19, 2022.

While the overall sentiments remained bearish, some retreats in the Shanghai futures Exchange added to the price pressure. "I won't be optimistic since SHFE retraced a bit," said a Singapore-based source. The buyers and sellers were cautious while they await the US Fed's monetary policy decision later in the week.

The traded level for November and December shipments of SIR 20 in the range of US$1330- US$1340/mt FOB Belawan/Surabaya, while forward offers were around US$1355/mt on FOB basis with a buying interest hovering between US$1335- US$1345/mt on FOB basis. The lower-than-expected levels in the spot market have pushed buyers and sellers to book forward cargoes. "Everyone trying to roll their SIR longs forward as there are no buyers for the nearby," a trader source added.

However, there was some buying interest from China amid the sliding price. Trades for October and November arrival shipments were reported in the range of US$1355-US$1380/mt on CIF basis. Some sellers noted that selling "Normal China or mixture" Thai rubber into China is better.

This has priced out African rubber into the Chinese market. According to market sources, it is "tough for African cargo to work" at the current price level. The buying interest from India also remained subdued, with the bid level at around US$1100/mt on CIF basis.

Meanwhile, some easing in the Covid lockdowns across China might support the prices. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Fundamentals lead the way in a mixed trend week

(16 Sep) Prices clung on to previous day’s levels for most grades indicating weaker demand and the end to most traders short covering activities which lended support in the market.

Thai raw material prices finally catch up to impact of rainy weather

Despite heavy rain in some parts of Thailand, raw material prices took awhile to catch up. This week prices of Thai raw material rose up 3 THB/Kg week on week. Helixtap assessed Thai raw mat at 41 THB/Kg. However, some producers we spoke to noted that “raw materials were plentiful and that the rains were limited to the Northeastern parts and not so much in the South”. This may keep a lid on price increases and “normalcy” may resume with Indonesian rubber having a premium vis as vis Thai Rubber.

Indonesian raw material also saw a spike week on week. Some producers noticed some bigger processors buying at a much higher level than the market, at 19,000 IDR/Kg. Helixtap assessed Indo raw mat at 18,500 IDR/Kg. Other processors have reduced purchasing and output of their factories amidst low premiums.

Indonesian reaches attractive levels, interest seen further out till Mar 2023

This week Indonesian rubber traded at a discount to Thai rubber, averaging 20 USD/MT lower. The lower premium of Indonesian indicates a weaker international market demand environment. Today, the gap narrows to just 5 USD/MT. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. 
 

This week Korean buyers were active in the market for Thai grades. Helixtap assessed STR20 1,345 USD/MT  FOB Bangkok Laem Chabang.
 

Bulk latex from Thailand also rebounded a little, with China restocking and the impact of some factories in Rayong being impacted production wise. Helixtap assessed Bulk Latex FOB Bangkok 1,010 USD/MT. 

Indonesian levels look to have reached a “value” play as buyers were seen looking for Jan - Mar 2023 cargoes. Traders and consumers were looking to lock-in these levels as some rumours of some consumers “returning to the spot market soon” spiked interest. Bids were seen at USD/MT 1,350 FOB Bel Sby for Jan-Mar 2023 cargoes. However, some traders Helixtap spoke to hypothesized, “Perhaps someone has cornered the Jan or Q1 contract. Despite oversupply issues vs demand and SIR trading at a discount to STR”.
 

EU demand remains weak, African sellers flock to China

Europe and US buyers were largely absent from the market leaving African sellers active in the Asian markets. Helixtap assessed AFR10 1,305 USD/MT CIF Hamburg Rotterdam. African cargoes were seen being offered 1,310 - 1,320 CIF China main ports for Nov arrival this week. Whilst SMR20 Mixture and STR20 Mixture were offered 1,365 - 1,370 CIF China main ports. Large buying by traders in China were seen at this range - Helixtap assessed CIF China 1,360 USD/MT CIF China. 
 

Indo- Thai scuffle continues

The scuffle between the Indo and Thai rubber continued keeping the spot prices mixed during the Asian trade day amid a slow demand. However, the market is skeptical about how long the Indonesian producers can hold on to their competitive edge in the market; sources said Helixtap on Thursday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1340/mt FOB Belawan/Surabaya, up US$5, Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang, down US$10, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$ 5, on September 15, 2022.

There was some correction in the Thai offer level during the day, indicating the Thai producers’ attempt to stay competitive in a downcast market. This added to the pressure on the prices as well as market sentiment. The offers for October and November shipments of STR 20 were in the range of US$1350- US$1360/mt FOB Bangkok/Laem Chabang, with the buying interest at US$1340/mt on FOB basis.

However, Indonesian rubber continued at a discounted level to Thai rubber, even though the Indo-Thai gap narrowed to a negative US$5. “There are plenty of sellers for SIR 20 now,” said a Singapore-based source. The traded level for November to January shipments of SIR 20 was in the range of US$1340- US$1345/mt FOB Belawan/Surabaya, while offers were around US$1340/mt on FOB basis.

The overall market sentiment was sluggish, with some appreciation in the US dollar. In addition, the possibility of a further hike in global borrowing costs kept the buyers cautious. The broader focus, however, remained squarely on the risk of rising interest rates and painfully high energy prices causing recessions.

Aggressive Indo offers widen Indo-Thai premium

The aggressive stance of the Indonesian producers widened the premium between Indo-Thai prices during the Asian trade day as some sellers tried to liquidate to ease the oversupply in the market; sources said Helixtap on Wednesday.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, down US$15, Standard Thailand Rubber (STR) 20 at US$1355/mt FOB Bangkok/Laem Chabang, down US$5, and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, down US$ 5, on September 14, 2022.

Indonesian rubber continued to trade at a discounted level to Thai rubber for two consecutive days, indicating the aggressive stance of the Indonesian producers. Some attributed the reversal in premium to oversupply in the Indonesian market; thus, the producers are in a rush to move volume.

Indonesian producers have seen some setbacks amid consistent negative margin pressure coupled with an oversupply of raw materials due to imports from Africa. However, with some corrections in the raw material prices, the producers have some room to adjust the prices. According to market sources, Indonesian raw material is around IDR 17,800/kg ex-works.

"I think Indonesian shippers are sick and tired of the Thais taking our market share......so time to fight," a producer source noted. The traded level for November and December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while offers were around US$1340/mt on FOB basis. "Heard SIR 20 got many sellers in the market today," a Singapore-based trader said.

Indonesian rubber is at a negative US$20, lower than the previous day. According to Helixtap data, the Indo-Thai gap peaked at around US$125 in early May and dropped to a negative US$25 in early March this year.

Meanwhile, the Thai producers held on to their offer despite overall bearish demand cues. Offers for Q4 shipments of STR 20 were in the range of US$1360- US$1380/mt FOB Bangkok/Laem Chabang.

The unexpected higher US consumer prices in August and continued underlying inflationary pressure shook the market confidence. As a result, the market would not wait for the Federal Reserve's move, which according to the market, is likely to be around a 75 basis points interest rate hike for the third time. This outlook boosted the US dollar, which also impacted the rubber market. 

Indo-Thai premium reversed, long-term support doubtful 

The spot prices found some support with a reversal in the premium of Indo-Thai price during the Asian trade day amid some positive global cues and short covering coupled with some weakness in the US dollar. However, the market participants remained cautious amid overall weakness in the market fundamentals; sources said Helixtap on Tuesday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1350/mt FOB Belawan/Surabaya, up US$15, Standard Thailand Rubber (STR) 20 at US$1360/mt FOB Bangkok/Laem Chabang, up US$45, and African Rubber (AFR) 10 at US$1300/mt CIF Rotterdam/Hamburg, up US$ 15, on September 13, 2022.

Some market sources attributed the price support to some short covering, while others believed that some positive macro-economic indicators boosted the sentiment. "Seems to be macro, US dollar weaker, some positivity in China. There will be a lot of shorts in the market. If this is a squeeze, it could run for a few days," a trader source said. A Singapore-based source noted that it seemed like a short covering propped the prices up. However, there was a drop in open interest.

"Some relief in the market today," the trader source noted as the traded level for prompt STR 20 was at US$1360/mt FOB Bangkok/Laem Chabang and for November and December shipments of SIR 20 at US$1350/mt FOB Belawan/Surabaya.

There was a switch in the premium between the Thai and Indonesian rubber, with Indonesian rubber at a negative US$10 for the first time since February earlier this year. According to the producers, the premium for Indonesian rubber is almost gone. 

As the market awaits US consumers' inflation data, the expectations of some drop lent some support to the market confidence. In addition, industry experts also expect a slowdown in headline CPI given the correction in oil and other commodity prices. Furthermore, there are talks of the possibility of Beijing raising stimulus to cap the slowdown in economic growth. 

However, the core fundamentals still are weak, which would deter a rebound in the market. According to market participants, unless there is a strong pick-up in demand, it would be tough for any support to hold for long.

Meanwhile, according to market sources, some African producers were skeptical of offers amid the existing volatility. An offer for AFR 10 at US$1400/mt CIF India, did not find any counter buying interest. However, there has been a slight uptick in demand for African raw materials from Malaysia amid heavy rains in Thailand, which is impacting the shipments.

Buyers sidelined on weak global cues

Extended holiday in China amid a downcast previous week kept the buyers away from the market during the Asian trade day as the spot prices treaded sideways; sources said Helixtap on Monday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, Standard Thailand Rubber (STR) 20 at US$1315/mt FOB Bangkok/Laem Chabang, and African Rubber (AFR) 10 at US$1285/mt CIF Rotterdam/Hamburg, all unchanged from September 09, 2022.

The market sources noted that the market was extremely quiet amid holidays in China and South Korea, and the offers were also limited. Meanwhile, other markets were largely sidelined ahead of the US inflation release. As a result, there is caution among the buyers while sellers too took it slowly during the day. 

The offer level for SIR 20 was at US$1340/mt FOB Belawan/Surabaya for December shipments, while the offers for prompt STR 20 were at US$1360/mt FOB Bangkok/Laem Chabang. “Today very quiet. Generally, consumers are sidelined,” said a Singapore-based source. The Chinese demand is like to remain muted amid lockdowns.

Meanwhile, continued pressure on the prices has led to more shutdowns of Indonesian factories. “Some more factories are stopping production for a few days to weeks due to low demand,” the Singapore-based source added. According to industry experts, as of now, there are some shutdowns in Pontianak. However, if the bear demand continues, Palembang factories will be impacted. 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here.

Quiet end to the week, with market participants expecting the worse to come 

(09 Sep) The week ended off overall down, albeit slightly, unlike the large week on week drops the market experienced in August. 

Rainy season and floods in some parts of Thailand fail to raise prices 

Thailand sellers continued to remain aggressive today, despite heavy rains and flash floods reported especially in the East of Thailand. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang. Some producers Helixtap spoke to say that such aggressive offering “means that traders are taking a risk as they are holding high cost stock. As Thailand moves in to the rainy season now, it is unlikely they will be able to get access to raw material below 40 THB/Kg.” Helixtap assessed Thai Raw Mat 38 THB/Kg. This is the lowest level it has been in a year. This week raw material prices ranged from 37.50 - 39 THB/Kg, and based on our regional analysis, East and South Thailand were the most impacted by rains, whilst getting raw material volume in NorthEast of Thailand was not an issue. 

Latex below 1,000 USD/MT for the first time in a year

Helixtap assessed Bulk Latex FOB Bangkok 990 USD/MT. Like Thai raw material, this is the lowest level it has been since a year, and China has been largely absent from the market. Some Latex suppliers Helixtap spoke to mentioned “One of our factories in East Rayong was under water due to flash floods and will be out of action for approximately 3 days.” 
 

Looking at Indonesia, some big factories saw raw material prices go below 18,000 IDR/Kg this week. Helixtap assessed Indo Raw Mat 18,000 IDR/Kg. Producers we spoke to mentioned “things are not looking great as we see low supply, low demand, everything is low!”. Helixtap assessed SIR20  1,335 USD/MT FOB Belawan Surabaya. 

Prices following demand (or lack of) entirely

As China headed off to their long weekend for the Mid Autumn Festival, prices remained largely unchanged. Traders Helixtap spoke to commented, “as long as the demand shows no sign of improvement, the price will remain weak. It does not matter how much the supply is affected now.” Helixtap assessed CIF China 1,330 USD/MT CIF China. Many offers were seen around 1,350 - 1,460 USD/MT this week, with Sep arrival prompt cargoes still available at 1,320 - 1,330 CIF China.  

African demand was not spared but slowed its price decline. Offers for AFR10 in to China were seen at 1,280 - 1,290 today. On the Europe front, Helixtap assessed AFR10 1,285 USD/MT CIF Hamburg Rotterdam. Most people Helixtap spoke to echoed the elephant in the room - demand - coupled with decent production levels and prompt cargoes aplenty leave the market awash with sellers for a while. From a technical standpoint, some support levels have been reached, but fundamentals have not changed.
 

Typically, the September and October period is China’s highest demand and the market will be looking to China to come back hopefully sooner rather than later.

Sellers heave a sigh of relief with prices stable today

(08 Sep) Sellers finally got a break from the downward momentum in prices today, with spot rubber market trading at almost the same levels as yesterday. 

Roll of the dice: Support level or Short Seller Covering?

Chinese traders were rumoured to be short covering after almost 2 weeks of sharp drops. This is in line with Helixtap’s technical analysis of the support level at 1,250 USD/MT. This movement looked like people “cashing out” before the support levels. Producers  Helixtap spoke to were hesitant to view this level as a support as fundamentals have not changed. 

Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya, which was unchanged to the previous day. Helixtap assessed STR20 1,320 USD/MT FOB Bangkok Laem Chabang which was also unchanged day on day. 

Quiet Market: Buyers Proceed with Caution

China grades were well offered with prompt Sep cargoes all the way to Jan arrival cargoes. Offer prices ranged between USD/MT 1,340 - 1,360 for STR20 Mixture CIF China. However, buying continued to remain muted with some buyers choosing to “wait for a lower price further out”. 
 

On the African origins, sellers had to adapt to lower premium markets and this has led to African assessed AFR10 physical prices to show a drop of -260 USD/MT from August 1 2022 to date. Helixtap assessed AFR10 AFR10 1,290 USD/MT CIF Hamburg Rotterdam. 
 

Taking a look at the table, these are the month on month changes of Daily Helixtap Assessed Physical Rubber:

Source: Helixtap

Prices continue to fall, producers have some reprieve with weak domestic currencies

(07 Sep) Sellers took matters into their own hands by being more aggressive today in the rubber spot market. Given a strong bearish sentiment amongst many, and weak demand signals as well as a strong USD, most producers were keen to lock in sales today.

Weak Emerging Market Currencies allow for some margin

Looking at some of the major currencies, weakening emerging market currencies helped processors a little, especially in Thailand. This could explain why many Thai sellers were leading the pack in finding home for cargoes. Thai raw materials were also seen below 40THB/Kg, offering processors a little bit of respite. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang.

Some producing regions currencies:

• IDR/USD was close to 15,000 today, which is the highest since last year.
• THB/USD crossed 36 today, at 36.72 which is the highest in 5 years.
   

Meanwhile on the demand front, China’s Yuan was comparatively weaker, amidst sustained lockdowns and some Chinese banks reeling from failing property loans.

• RMB/USD almost touched 7 today, which is close to 2020 at the start of the COVID outbreak.
• China’s central bank (PBOC) intervened earlier this week by reducing the amount of foreign currency banks needed to hold. 
   

China’s reduced buying power for imports continued to be one of the major factors in the sharp dip in prices week on week. CIF China cargoes were seen traded at 1,320 - 1,330 USD/MT for prompt Sep arrival. Further out, there was some reprieve with trades reported at 1,340 USD/MT.
 

Looking back last week, Helixtap weekly assessed STR20 Mixture CIF China on 2 Sep 2022 at 1,370 USD/MT. This represents a dip of about USD50/MT with more downward pressure.

Vietnam bucking the trend 

Vietnamese producers who mostly ship to China were seen to be either sidelined or holding on to much higher prices. For example SVR10 was offered at USD/MT 1,380 - 1,390 FOB HCM today for Nov loading. A Vietnamese producer Helixtap spoke to said, “Whilst there seems to be an aggressive sell off by Thai producers, Vietnamese producers abstained from the market or chose to ignore the trend.” A wide range of offers were seen, with dealers following the trend and offering in line at 1,350 CIF China for SVR10 Nov arrival. 
 

Aggressive sellers, hunting for buyers

With demand pressures abound - all 3 of Helixtap’s daily assessed prices saw a day on day drop. AFR10 prices saw the biggest dip -30USD/MT from the previous day. This is probably due to their biggest exposure and reliance on EU and US markets. Some processors were forced to adapt and move cargoes to more price-sensitive China and India markets. Helixtap assessed AFR10 1,280 USD/MT CIF Hamburg Rotterdam. This is also the traded value for AFR10 CIF China main ports, Nov arrival.

Today, Indonesian processors were also seen to be more willing to lock in sales probably due to lowering raw material costs as well as the strong downward trend. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. The differential between SIR20 and the futures price is +60 USD/MT, which according to Helixtap data is the same differential in the month of Jan 2021. Looking back historically, the following month (Feb 2021), the differential between futures and Indonesian physical dipped to the lowest that year, at +37 USD/MT, before rising again.
 

"It seems to be an every man to themselves moment", said an Indonesian producer Helixtap spoke to. This is in reference to no government support, some consumers tightening African import tolerance and aggressively priced Thai grades. 

Based on Helixtap's technical analysis last week support levels for futures was at 1,250 USD/MT. This may be tested again given the weak global fundamentals. 

Prices slide again, sellers continue to face more pressure

(06 Sep) After a flat start to the week, prices continue their slide today with all grades across the board facing pressures as sellers look to any buyer for a bid. 
 

Indonesians provide bargain trade armed with African imports

Indonesian sellers faced a -35 USD/MT dip day on day with Helixtap assessed SIR20 1,355 USD/MT FOB Belawan Surabaya. Sellers started offers at USD/MT 1,380 FOB Belawan Surabaya but capitulated to the bids at USD/MT 1,355. Sellers of non Indonesian grades said “Indonesian suppliers are finally competing with Thai suppliers, although everyone is hurting at these levels.” 

Given the recent influx of African raw material to Indonesia, some major consumers have told producers that they would black list producers who were using African rubber imports. Tyre majors Helixtap spoke to cited “sustainability and reducing carbon footprint” as their main rationale behind this. Indonesian producers Helixtap spoke to had differing opinions. One of the Indonesian suppliers based in Singapore said, “They are expecting us to fight with hands behind our backs' ', alluding to the negative margin that has plagued Indonesian processors this year. Based on our analysis, it would be difficult to measure and implement, and ultimately a risk a supplier may take depending on the levels the market would trade at.

At these levels, Indonesian grades seem to be at a level for value and bargain buyers. Vietnamese grades which typically trade at a discount to Indonesian were seen offered at USD/MT 1,400. Malaysian grades were also being offered at USD/MT 40 - 50 higher than Indonesian grades. 
 

Thai sellers rush to offload, look to RAOT 

Helixtap assessed STR20 1,335 USD/MT  FOB Bangkok Laem Chabang. Thai producers and traders Helixtap spoke to said “Market seems to be falling like a stone”, whilst others alluded to “some government intervention by RAOT, as farmers cannot make ends meet at these levels.” 

African sellers feel the heat

Helixtap assessed AFR10 1,310 USD/MT CIF Hamburg Rotterdam. Offers were met with few and far between bids as buyers probably took this chance to focus their attention on higher or prime grade material. On a day on day basis, African origin faced the biggest drop of -40 USD/MT. An African producer said “Our prices have unfortunately slipped well below the futures prices and at a discount now. When the prices dip too fast, it is very tough for the producers.”

General malaise in global demand means sellers continue to face pressure 

With Germany already implementing a plan to save energy and cushion an energy crunch in the winter months, Europe has been quiet and tyre majors seem to have enough buffer of existing stock. South Asian tyre manufacturers were also well stocked. 

Buyers sidelined on weak global cues

The spot rubber market steadied amid muted activities during the Asian trade day as the buyers' side lined anticipating more correction in the prices amid a hike in oil prices and more lockdowns in China; sources said Helixtap on Wednesday. 

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1390/mt FOB Belawan/Surabaya, up US$5, and Standard Thailand Rubber (STR) 20 at US$1350/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1350/mt CIF Rotterdam/Hamburg, both unchanged from September 02, 2022.

While the price stabilized a bit during the day, after two weeks of consecutive free fall, it was largely driven by the absence of buyers rather than prices seeing some support. According to market sources, the market is very quiet now, with some of the major buyers out of the market. 

The traded level for SIR 20 was at US$1390/mt FOB Belawan/Surabaya for November shipments, while the offers for prompt STR 20 were at US$1370/mt FOB Bangkok/Laem Chabang. The Chinese continued to remain muted. The fresh set of lockdowns across mainland China has weighed on the sentiments. However, there were some offers for African rubber into China at around US$1330/mt on CIF basis, while the bids remained limited. 

Further adding to the downcast view, Japanese services sector activity shrank in August, for the first time in five months, triggered by the resurgence of COVID-19 infections. Japan being a key rubber buyer, a drop-in services activity coupled with a decline in manufacturing is likely to take a toll on the spot rubber demand. As a result, the market sources expect the prices to see more correction. In addition, the surge in oil prices also impacted the market sentiments amid the anticipation of a possible cut in oil production. 

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread click here.

Heavy rain forecasts in Thailand drive raw material prices north

Reports of heavy rains in Thailand have driven the raw material prices up during the week as the market experts see some more support amid the expectation of weather to worsen. The situation amped up the spot rubber prices as the Chinese buyers continued to remain bullish, expecting a supply shortage.

“With the Thai flooding news, Chinese are slightly more bullish and taking note of the flood,” said a Singapore-based trader. Even though Thai raw material prices saw a marginal rise over the week, the market expectation is that the prices are likely to remain northbound in the coming week, amid the forecasts of another storm in the first week of October.

“Had a lot of rain this week. Some provinces are flooded. Even Bangkok is under flood threat,” said a Thailand-based source. Some market participants feel this could be a much-needed breather for the spot prices as the weather disruption clubbed with the restocking in China.

According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. The prices for Thai raw materials ranged between THB 39-THB 44.5/kg ex-works. The market, however, remained divided on the extent of the impact of the rains.

Some strength was seen in the Indonesian raw material prices as well. While the raw material prices have surged on some firm buying interest, there is some ambiguity about the factories still producing in the region. According to market sources, owing to continued pressure on  prices, some Indonesian factories are “on shaky ground” or even have shut down.

Helixtap assessed Indonesian raw material was assessed at IDR 18,400/kg, up IDR 350, and Thai raw at THB 41/kg, up THB 1.5 over the week.

However, the market was slightly slow for latex despite some buying interest from China in the TSR market. Market sources noted that China was a very active buyer last week. However, this week, Chinese buyers for latex are relatively quiet. “There hasn’t been much activity apart from a few sporadic buying,” the Thailand-based sources added. Helixtap assessed Thai Latex Bulk was assessed at US$ 9250/mt FOB Bangkok/LCB, down US$75, over the week. 

TSR upbeat on China 

Chinese buyers were snapping up cargoes this week, with the buying frenzy continuing across the curve. The buying interest was seen across many grades. "I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter," a China-based trader said earlier this week.

Thai sellers were seen preferring sales to China due to less stringent requirements and with current supported CIF China levels. According to market sources, some producers buy raw materials to fulfill the forward bookings. With China's demand seemingly back in the market, this could be the turning point and start of some upward price movement. However, some market participants are skeptical of the rebound to sustain.

With some expectations for support post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending would add to the market's bearishness, prompting the government to provide more economic stimulus.  

For STR20 Mixture, the prices spot market was seen in the range of US$1370- US$1375/mt CIF China main ports for October and November arrival. However, for forward cargoes, the range was at US$1380 – US$1390/mt CIF China. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$1375/mt CIF China, steady over the week.

Indo still competitive in international market 

While China did bring in some optimism in the market, the international market continued to remain sluggish, capping the rise in the spot market. Meanwhile, Indonesian rubber continued to remain the economic alternative for international buyers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while for the forward months was a bit higher at US$1350/mt FOB Belawan/Surabaya. The Indonesian market seems to be in a contango with most buyers and sellers active in the forward month bookings.

"There are no international buyers since SIR offered at par with SICOM. So, all buyers moved to buy SIR," a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR, or mixture.

African sellers were seen offering very competitive prices at US$1300 – US$1310/mt CIF China main ports as some African producers needed to liquidate volume, as per market sources. On the European front, the buyers continued to remain cautious, which explained the aggressive offering into China but followed the rest of the market on a slight upward trend.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, steady, Standard Thailand Rubber (STR) 20 at US$1352.5/mt FOB Bangkok/Laem Chabang, down US$7.5, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, steady, on September 30, 2022.

Spot activity moves forward, prices close to floor

The shift in the buying pattern during the week despite underscored expectations for tighter monetary policy and a slowing global economy could indicate that the spot prices are finally nearing the floor. The market, however, remained divided on the rationale behind the shift in the buying pattern, with some attributing it to possible positives in the upcoming China congress while others feel the prices have very little room for correction. 

While the overall sentiments remained bearish, with expected Fed hike, building inflationary pressure, and Russian President Vladimir Putin's announcement of partial military mobilization, the market activity shifted from prompt to forward months. 

The situation could be deemed as unusual as for the past few years, with the outbreak of Covid followed by some rebound coupled with a series of black swan events, the instinctive move has been to book as prompt as possible. While some sources tagged the current situation as a "crazy market," the possible explanation could be the prices are closing in now, and the buyers believe in the same. 

Some markets, like Indonesia, have seen a challenging year amid almost a year of negative margins and a considerable inflow of African raw materials. As a result, prices tumbled down. According to Helixtap data, Indonesian producers are seeing a negative margin of 4.1% as of September 23, 2022. The traded level for November and December shipments of SIR 20 continued to remain downcast, closing the week at US$1325- US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya.

"Don't hope for too much more down. Low prices mean all sellers' margins are reduced," said a producer source indicating that the prices are possibly nearing the floor. At least for Indonesia, the current glut is primarily triggered by the cancellation of LTC and massive African imports. According to market sources, around a 50%-70% reduction in LTCs for the rest of 2022 is weighing heavily on spot rubber prices.

During the Asian trade day, the prices remained largely stable, closing the week at a more or less stable now. Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1327.5/mt FOB Belawan/Surabaya, down US$2.5, on September 23, 2022.

Chinese buying triggered increased activities 

There was some uptick in Chinese buying this week amid southbound prices. However, the interest broadly hovered in the forward months. While this could be a part of the restocking China does before the Lunar New year holidays, which is at the end of January in 2023, some market participants believe the increased activity is due to the anticipation of some positive policy announcement in the upcoming Congress. 

“China super active. Expecting something around China congress. At market level, fundamentals are very weak but China sentiments around the Congress helping keep market at this level,’ said another producer source. According to some market participants, Chinese buyers are bidding till February 2023 as most of the factory stocks for 2022 are sold. “ 

The traded level for October and November arrival shipments was reported in the range of US$1355-US$1380/mt on CIF basis during the week. For January, however, was around US$ 1400/mt on CIF basis. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$13750/mt CIF China, up US$15 over the week.

China’s decision to keep its benchmark lending rates unchanged with some easing in the Covid lockdowns supported the sentiment. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

Pressure on AFR, Thai opts mixture, spot rangebound  

The Thai seller, on the other hand, continued to hold on to the offers for prime rubber despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped over. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber. 

Some sellers noted that selling "Normal China or mixture" Thai rubber in China is better. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the pressure was also seen building on the African front. Even though there has been some price correction, some African producers are unwilling to buck down. "Offers from factories are still coming in high," said a trader source. 

According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In an attempt to adhere to their fair price commitment, some producers cannot benefit from the raw material price correction, limiting the scope for lowering the offers. 

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, both steady, on September 23, 2022.
 

Raw material market mixed

The desperation amid the sellers owing to the downcast demand kept the raw material market southbound during the week. Even though there were reports of rains in parts of Thailand impacting the tapping activities and logistics, the raw material prices continued to remain weak. "There is not much supply of field latex as it's raining in all parts of Thailand," said a Thailand-based source adding the Thai cup lumps prices are around THB395.-THB 40/kg ex-works. However, there was some interest from China for latex bulk, with the traded level at US$1070-US$1090/mt on CIF basis. However, the prices failed to see support. 

Meanwhile, the Indonesian raw material prices also saw a correction, but not to the level the market expected amid the glut. The raw material prices ranged between IDR 17,600- IDR 18,500/kg ex-works. The market participants feel there is hardly any room for more correction, even though some African raw material is still floating in the market.

Helixtap assessed Indonesian raw material at IDR 18,050/kg, down IDR 450, Thai Latex Bulk was assessed at US$1000/mt FOB Bangkok/LCB, down US$10, and Thai raw at THB 39.5/kg, down THB 1.5 over the week.

Fundamentals lead the way in a mixed trend week

(16 Sep) Prices clung on to previous day’s levels for most grades indicating weaker demand and the end to most traders short covering activities which lended support in the market.

Thai raw material prices finally catch up to impact of rainy weather

Despite heavy rain in some parts of Thailand, raw material prices took awhile to catch up. This week prices of Thai raw material rose up 3 THB/Kg week on week. Helixtap assessed Thai raw mat at 41 THB/Kg. However, some producers we spoke to noted that “raw materials were plentiful and that the rains were limited to the Northeastern parts and not so much in the South”. This may keep a lid on price increases and “normalcy” may resume with Indonesian rubber having a premium vis as vis Thai Rubber.

Indonesian raw material also saw a spike week on week. Some producers noticed some bigger processors buying at a much higher level than the market, at 19,000 IDR/Kg. Helixtap assessed Indo raw mat at 18,500 IDR/Kg. Other processors have reduced purchasing and output of their factories amidst low premiums.

Indonesian reaches attractive levels, interest seen further out till Mar 2023

This week Indonesian rubber traded at a discount to Thai rubber, averaging 20 USD/MT lower. The lower premium of Indonesian indicates a weaker international market demand environment. Today, the gap narrows to just 5 USD/MT. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. 
 

This week Korean buyers were active in the market for Thai grades. Helixtap assessed STR20 1,345 USD/MT  FOB Bangkok Laem Chabang.
 

Bulk latex from Thailand also rebounded a little, with China restocking and the impact of some factories in Rayong being impacted production wise. Helixtap assessed Bulk Latex FOB Bangkok 1,010 USD/MT. 

Indonesian levels look to have reached a “value” play as buyers were seen looking for Jan - Mar 2023 cargoes. Traders and consumers were looking to lock-in these levels as some rumours of some consumers “returning to the spot market soon” spiked interest. Bids were seen at USD/MT 1,350 FOB Bel Sby for Jan-Mar 2023 cargoes. However, some traders Helixtap spoke to hypothesized, “Perhaps someone has cornered the Jan or Q1 contract. Despite oversupply issues vs demand and SIR trading at a discount to STR”.
 

EU demand remains weak, African sellers flock to China

Europe and US buyers were largely absent from the market leaving African sellers active in the Asian markets. Helixtap assessed AFR10 1,305 USD/MT CIF Hamburg Rotterdam. African cargoes were seen being offered 1,310 - 1,320 CIF China main ports for Nov arrival this week. Whilst SMR20 Mixture and STR20 Mixture were offered 1,365 - 1,370 CIF China main ports. Large buying by traders in China were seen at this range - Helixtap assessed CIF China 1,360 USD/MT CIF China. 
 

Quiet end to the week, with market participants expecting the worse to come 

(09 Sep) The week ended off overall down, albeit slightly, unlike the large week on week drops the market experienced in August. 

Rainy season and floods in some parts of Thailand fail to raise prices 

Thailand sellers continued to remain aggressive today, despite heavy rains and flash floods reported especially in the East of Thailand. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang. Some producers Helixtap spoke to say that such aggressive offering “means that traders are taking a risk as they are holding high cost stock. As Thailand moves in to the rainy season now, it is unlikely they will be able to get access to raw material below 40 THB/Kg.” Helixtap assessed Thai Raw Mat 38 THB/Kg. This is the lowest level it has been in a year. This week raw material prices ranged from 37.50 - 39 THB/Kg, and based on our regional analysis, East and South Thailand were the most impacted by rains, whilst getting raw material volume in NorthEast of Thailand was not an issue. 

Latex below 1,000 USD/MT for the first time in a year

Helixtap assessed Bulk Latex FOB Bangkok 990 USD/MT. Like Thai raw material, this is the lowest level it has been since a year, and China has been largely absent from the market. Some Latex suppliers Helixtap spoke to mentioned “One of our factories in East Rayong was under water due to flash floods and will be out of action for approximately 3 days.” 

Looking at Indonesia, some big factories saw raw material prices go below 18,000 IDR/Kg this week. Helixtap assessed Indo Raw Mat 18,000 IDR/Kg. Producers we spoke to mentioned “things are not looking great as we see low supply, low demand, everything is low!”. Helixtap assessed SIR20  1,335 USD/MT FOB Belawan Surabaya. 

Prices following demand (or lack of) entirely

As China headed off to their long weekend for the Mid Autumn Festival, prices remained largely unchanged. Traders Helixtap spoke to commented, “as long as the demand shows no sign of improvement, the price will remain weak. It does not matter how much the supply is affected now.” Helixtap assessed CIF China 1,330 USD/MT CIF China. Many offers were seen around 1,350 - 1,460 USD/MT this week, with Sep arrival prompt cargoes still available at 1,320 - 1,330 CIF China.  

African demand was not spared but slowed its price decline. Offers for AFR10 in to China were seen at 1,280 - 1,290 today. On the Europe front, Helixtap assessed AFR10 1,285 USD/MT CIF Hamburg Rotterdam. Most people Helixtap spoke to echoed the elephant in the room - demand - coupled with decent production levels and prompt cargoes aplenty leave the market awash with sellers for a while. From a technical standpoint, some support levels have been reached, but fundamentals have not changed.

Typically, the September and October period is China’s highest demand and the market will be looking to China to come back hopefully sooner rather than later.

Heavy rain forecasts in Thailand drive raw material prices north

Reports of heavy rains in Thailand have driven the raw material prices up during the week as the market experts see some more support amid the expectation of weather to worsen. The situation amped up the spot rubber prices as the Chinese buyers continued to remain bullish, expecting a supply shortage.

“With the Thai flooding news, Chinese are slightly more bullish and taking note of the flood,” said a Singapore-based trader. Even though Thai raw material prices saw a marginal rise over the week, the market expectation is that the prices are likely to remain northbound in the coming week, amid the forecasts of another storm in the first week of October.

“Had a lot of rain this week. Some provinces are flooded. Even Bangkok is under flood threat,” said a Thailand-based source. Some market participants feel this could be a much-needed breather for the spot prices as the weather disruption clubbed with the restocking in China.

According to producers, the supply in northern Thailand is usually very good during this period. However, the production and tapping activities are affected owing to heavy rains. The prices for Thai raw materials ranged between THB 39-THB 44.5/kg ex-works. The market, however, remained divided on the extent of the impact of the rains.

Some strength was seen in the Indonesian raw material prices as well. While the raw material prices have surged on some firm buying interest, there is some ambiguity about the factories still producing in the region. According to market sources, owing to continued pressure on  prices, some Indonesian factories are “on shaky ground” or even have shut down.

Helixtap assessed Indonesian raw material was assessed at IDR 18,400/kg, up IDR 350, and Thai raw at THB 41/kg, up THB 1.5 over the week.

However, the market was slightly slow for latex despite some buying interest from China in the TSR market. Market sources noted that China was a very active buyer last week. However, this week, Chinese buyers for latex are relatively quiet. “There hasn’t been much activity apart from a few sporadic buying,” the Thailand-based sources added. Helixtap assessed Thai Latex Bulk was assessed at US$ 9250/mt FOB Bangkok/LCB, down US$75, over the week. 

TSR upbeat on China 

Chinese buyers were snapping up cargoes this week, with the buying frenzy continuing across the curve. The buying interest was seen across many grades. "I have sold my entire factory position for 2022, and perhaps even oversold for the first quarter," a China-based trader said earlier this week.

Thai sellers were seen preferring sales to China due to less stringent requirements and with current supported CIF China levels. According to market sources, some producers buy raw materials to fulfill the forward bookings. With China's demand seemingly back in the market, this could be the turning point and start of some upward price movement. However, some market participants are skeptical of the rebound to sustain.

With some expectations for support post the holidays in China, a lot would ride on travel and consumption during the holidays. Weaker spending would add to the market's bearishness, prompting the government to provide more economic stimulus.  

For STR20 Mixture, the prices spot market was seen in the range of US$1370- US$1375/mt CIF China main ports for October and November arrival. However, for forward cargoes, the range was at US$1380 – US$1390/mt CIF China. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$1375/mt CIF China, steady over the week.

Indo still competitive in international market 

While China did bring in some optimism in the market, the international market continued to remain sluggish, capping the rise in the spot market. Meanwhile, Indonesian rubber continued to remain the economic alternative for international buyers.

The traded level for December shipments of SIR 20 was at US$1335/mt FOB Belawan/Surabaya, while for the forward months was a bit higher at US$1350/mt FOB Belawan/Surabaya. The Indonesian market seems to be in a contango with most buyers and sellers active in the forward month bookings.

"There are no international buyers since SIR offered at par with SICOM. So, all buyers moved to buy SIR," a producer source noted. With a consistent drop in the SIR prices widening premium, SIR has been more economical for international buyers over the month.

Despite lower freight and southbound prices, the Indonesian rubber failed to optimize on the Chinese restocking. A trader source pointed out that SIR might not price well in China as they mainly opt for STR, SMR, or mixture.

African sellers were seen offering very competitive prices at US$1300 – US$1310/mt CIF China main ports as some African producers needed to liquidate volume, as per market sources. On the European front, the buyers continued to remain cautious, which explained the aggressive offering into China but followed the rest of the market on a slight upward trend.

Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1335/mt FOB Belawan/Surabaya, steady, Standard Thailand Rubber (STR) 20 at US$1352.5/mt FOB Bangkok/Laem Chabang, down US$7.5, and African Rubber (AFR) 10 at US$1310/mt CIF Rotterdam/Hamburg, steady, on September 30, 2022.

Spot activity moves forward, prices close to floor

The shift in the buying pattern during the week despite underscored expectations for tighter monetary policy and a slowing global economy could indicate that the spot prices are finally nearing the floor. The market, however, remained divided on the rationale behind the shift in the buying pattern, with some attributing it to possible positives in the upcoming China congress while others feel the prices have very little room for correction. 

While the overall sentiments remained bearish, with expected Fed hike, building inflationary pressure, and Russian President Vladimir Putin's announcement of partial military mobilization, the market activity shifted from prompt to forward months. 

The situation could be deemed as unusual as for the past few years, with the outbreak of Covid followed by some rebound coupled with a series of black swan events, the instinctive move has been to book as prompt as possible. While some sources tagged the current situation as a "crazy market," the possible explanation could be the prices are closing in now, and the buyers believe in the same. 

Some markets, like Indonesia, have seen a challenging year amid almost a year of negative margins and a considerable inflow of African raw materials. As a result, prices tumbled down. According to Helixtap data, Indonesian producers are seeing a negative margin of 4.1% as of September 23, 2022. The traded level for November and December shipments of SIR 20 continued to remain downcast, closing the week at US$1325- US$1330/mt FOB Belawan/Surabaya. However, the traded level for Q1 2023 shipments of SIR 20 hovered in the range of US$1340- US$1350/mt FOB Belawan/Surabaya.

"Don't hope for too much more down. Low prices mean all sellers' margins are reduced," said a producer source indicating that the prices are possibly nearing the floor. At least for Indonesia, the current glut is primarily triggered by the cancellation of LTC and massive African imports. According to market sources, around a 50%-70% reduction in LTCs for the rest of 2022 is weighing heavily on spot rubber prices.

During the Asian trade day, the prices remained largely stable, closing the week at a more or less stable now. Helixtap assessed Standard Indonesia Rubber (SIR) 20 at US$1327.5/mt FOB Belawan/Surabaya, down US$2.5, on September 23, 2022.

Chinese buying triggered increased activities 

There was some uptick in Chinese buying this week amid southbound prices. However, the interest broadly hovered in the forward months. While this could be a part of the restocking China does before the Lunar New year holidays, which is at the end of January in 2023, some market participants believe the increased activity is due to the anticipation of some positive policy announcement in the upcoming Congress. 

“China super active. Expecting something around China congress. At market level, fundamentals are very weak but China sentiments around the Congress helping keep market at this level,’ said another producer source. According to some market participants, Chinese buyers are bidding till February 2023 as most of the factory stocks for 2022 are sold. “ 

The traded level for October and November arrival shipments was reported in the range of US$1355-US$1380/mt on CIF basis during the week. For January, however, was around US$ 1400/mt on CIF basis. Helixtap assessed Technically Specified Rubber (TSR) 20 at US$13750/mt CIF China, up US$15 over the week.

China’s decision to keep its benchmark lending rates unchanged with some easing in the Covid lockdowns supported the sentiment. However, despite some positive economic data from China last week, including retail sales and industrial production, the Covid situation would likely pose a challenge until early 2023.

Pressure on AFR, Thai opts mixture, spot rangebound  

The Thai seller, on the other hand, continued to hold on to the offers for prime rubber despite the widening of the bid and offer gap. Offers for October to December shipments of STR 20 were priced at around US$1360/mt on FOB basis, while the buying interest dipped over. According to market sources, the Thai producers find offering STR 20 Mixture into the market more profitable than the prime rubber. 

Some sellers noted that selling "Normal China or mixture" Thai rubber in China is better. "Liquidity has dried up completely. Raw material prices have corrected, but Thai rubber is still enjoying a good margin," said a trader source.

Meanwhile, the pressure was also seen building on the African front. Even though there has been some price correction, some African producers are unwilling to buck down. "Offers from factories are still coming in high," said a trader source. 

According to a market source, the declared level for Ivory coast raw material is US$0.53/kg. However, the actual traded level is around US$0.35/kg to US$0.45/kg. In an attempt to adhere to their fair price commitment, some producers cannot benefit from the raw material price correction, limiting the scope for lowering the offers. 

Helixtap assessed Standard Thailand Rubber (STR) 20 at US$1345/mt FOB Bangkok/Laem Chabang and African Rubber (AFR) 10 at US$1295/mt CIF Rotterdam/Hamburg, both steady, on September 23, 2022.
 

Raw material market mixed

The desperation amid the sellers owing to the downcast demand kept the raw material market southbound during the week. Even though there were reports of rains in parts of Thailand impacting the tapping activities and logistics, the raw material prices continued to remain weak. "There is not much supply of field latex as it's raining in all parts of Thailand," said a Thailand-based source adding the Thai cup lumps prices are around THB395.-THB 40/kg ex-works. However, there was some interest from China for latex bulk, with the traded level at US$1070-US$1090/mt on CIF basis. However, the prices failed to see support. 

Meanwhile, the Indonesian raw material prices also saw a correction, but not to the level the market expected amid the glut. The raw material prices ranged between IDR 17,600- IDR 18,500/kg ex-works. The market participants feel there is hardly any room for more correction, even though some African raw material is still floating in the market.

Helixtap assessed Indonesian raw material at IDR 18,050/kg, down IDR 450, Thai Latex Bulk was assessed at US$1000/mt FOB Bangkok/LCB, down US$10, and Thai raw at THB 39.5/kg, down THB 1.5 over the week.

Fundamentals lead the way in a mixed trend week

(16 Sep) Prices clung on to previous day’s levels for most grades indicating weaker demand and the end to most traders short covering activities which lended support in the market.

Thai raw material prices finally catch up to impact of rainy weather

Despite heavy rain in some parts of Thailand, raw material prices took awhile to catch up. This week prices of Thai raw material rose up 3 THB/Kg week on week. Helixtap assessed Thai raw mat at 41 THB/Kg. However, some producers we spoke to noted that “raw materials were plentiful and that the rains were limited to the Northeastern parts and not so much in the South”. This may keep a lid on price increases and “normalcy” may resume with Indonesian rubber having a premium vis as vis Thai Rubber.

Indonesian raw material also saw a spike week on week. Some producers noticed some bigger processors buying at a much higher level than the market, at 19,000 IDR/Kg. Helixtap assessed Indo raw mat at 18,500 IDR/Kg. Other processors have reduced purchasing and output of their factories amidst low premiums.

Indonesian reaches attractive levels, interest seen further out till Mar 2023

This week Indonesian rubber traded at a discount to Thai rubber, averaging 20 USD/MT lower. The lower premium of Indonesian indicates a weaker international market demand environment. Today, the gap narrows to just 5 USD/MT. Helixtap assessed SIR20  1,340 USD/MT FOB Belawan Surabaya. 
 

This week Korean buyers were active in the market for Thai grades. Helixtap assessed STR20 1,345 USD/MT  FOB Bangkok Laem Chabang.
 

Bulk latex from Thailand also rebounded a little, with China restocking and the impact of some factories in Rayong being impacted production wise. Helixtap assessed Bulk Latex FOB Bangkok 1,010 USD/MT. 

Indonesian levels look to have reached a “value” play as buyers were seen looking for Jan - Mar 2023 cargoes. Traders and consumers were looking to lock-in these levels as some rumours of some consumers “returning to the spot market soon” spiked interest. Bids were seen at USD/MT 1,350 FOB Bel Sby for Jan-Mar 2023 cargoes. However, some traders Helixtap spoke to hypothesized, “Perhaps someone has cornered the Jan or Q1 contract. Despite oversupply issues vs demand and SIR trading at a discount to STR”.
 

EU demand remains weak, African sellers flock to China

Europe and US buyers were largely absent from the market leaving African sellers active in the Asian markets. Helixtap assessed AFR10 1,305 USD/MT CIF Hamburg Rotterdam. African cargoes were seen being offered 1,310 - 1,320 CIF China main ports for Nov arrival this week. Whilst SMR20 Mixture and STR20 Mixture were offered 1,365 - 1,370 CIF China main ports. Large buying by traders in China were seen at this range - Helixtap assessed CIF China 1,360 USD/MT CIF China. 
 

Quiet end to the week, with market participants expecting the worse to come 

(09 Sep) The week ended off overall down, albeit slightly, unlike the large week on week drops the market experienced in August. 

Rainy season and floods in some parts of Thailand fail to raise prices 

Thailand sellers continued to remain aggressive today, despite heavy rains and flash floods reported especially in the East of Thailand. Helixtap assessed STR20 1,320 USD/MT  FOB Bangkok Laem Chabang. Some producers Helixtap spoke to say that such aggressive offering “means that traders are taking a risk as they are holding high cost stock. As Thailand moves in to the rainy season now, it is unlikely they will be able to get access to raw material below 40 THB/Kg.” Helixtap assessed Thai Raw Mat 38 THB/Kg. This is the lowest level it has been in a year. This week raw material prices ranged from 37.50 - 39 THB/Kg, and based on our regional analysis, East and South Thailand were the most impacted by rains, whilst getting raw material volume in NorthEast of Thailand was not an issue. 

Latex below 1,000 USD/MT for the first time in a year

Helixtap assessed Bulk Latex FOB Bangkok 990 USD/MT. Like Thai raw material, this is the lowest level it has been since a year, and China has been largely absent from the market. Some Latex suppliers Helixtap spoke to mentioned “One of our factories in East Rayong was under water due to flash floods and will be out of action for approximately 3 days.” 
 

Looking at Indonesia, some big factories saw raw material prices go below 18,000 IDR/Kg this week. Helixtap assessed Indo Raw Mat 18,000 IDR/Kg. Producers we spoke to mentioned “things are not looking great as we see low supply, low demand, everything is low!”. Helixtap assessed SIR20  1,335 USD/MT FOB Belawan Surabaya. 

Prices following demand (or lack of) entirely

As China headed off to their long weekend for the Mid Autumn Festival, prices remained largely unchanged. Traders Helixtap spoke to commented, “as long as the demand shows no sign of improvement, the price will remain weak. It does not matter how much the supply is affected now.” Helixtap assessed CIF China 1,330 USD/MT CIF China. Many offers were seen around 1,350 - 1,460 USD/MT this week, with Sep arrival prompt cargoes still available at 1,320 - 1,330 CIF China.  

African demand was not spared but slowed its price decline. Offers for AFR10 in to China were seen at 1,280 - 1,290 today. On the Europe front, Helixtap assessed AFR10 1,285 USD/MT CIF Hamburg Rotterdam. Most people Helixtap spoke to echoed the elephant in the room - demand - coupled with decent production levels and prompt cargoes aplenty leave the market awash with sellers for a while. From a technical standpoint, some support levels have been reached, but fundamentals have not changed.
 

Typically, the September and October period is China’s highest demand and the market will be looking to China to come back hopefully sooner rather than later.