Weakness in African prices weighing on physical market sentiment

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1415/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, steady

The physical prices steadied during the day with Indonesia on holiday, and other producers tried to match the market level given the correction in the African rubber prices. However, China continued to remain sluggish. 

The traded level for SIR 20 during the day for the August shipment remained steady at US$1420/mt. However, Thai producers were trying to match the market level, with some producers even selling at the cost. According to Helixtap market sources, the offer level for STR 20 was around US$1320-US$1430/mt on FOB basis, with some lower offers as low as US$1400/mt. 

According to Helixtap market intelligence, producers struggled to sell in the international market as most buyers were sidelined. This has resulted in the narrowing gap between the Indo and Thai prices. As of June 1, 2023, the gap between SIR 20 and STR 20 is around (-)US$5/mt. 

The Chinese buying continued to remain sluggish. Only the cheapest options are finding their way into the Chinese market, said a Singapore-based source, 

The buyers are now in a very safe spot as they have options in the market. However, amid the existing weakness in the global economy, the overall buying is large as on when required. This is because the market at the moment is focused on broad macro trends. 

While the suspension of the US debt ceiling has lowered the chances of a hike in interest rates by the Fed, China’s weak PMI data is weighing heavily on the sentiment. In addition, sluggish global demand deepened with the decline in European manufacturing activity, which would pose a major challenge for the physical rubber market

Weak Chinese data weighs on physical market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1415/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, down US$10

The physical prices took a hit during the Asian trade day as weak Chinese PMI data weighed on the market confidence. While international buying capped the slide, African rubber prices are still under pressure.

Chinese data impacts the sentiment. 

With all indicators implying weakness in the Chinese economy, Chinese manufacturing activity weakened more than expected in May. The news took a toll on the physical market sentiment pulling the prices down. 

The traded level for SIR 20 during the day for the August shipment dropped to US$1420/mt. The slide, however, was capped by the international buying interest coupled with raw material shortages.

“China data is not looking good. Showing demand still weak,” said a Singapore-based source. 

The official manufacturing PMI fell to 48.8, the lowest since December. The buying in China has been sluggish for quite some time especially post the initial post-Covid relaxation rebound faded. 

In addition, talks of higher inventory level, even though the average SHFE inventory level for May 2023, until the week ending May 26, is around 53% lower than the stock level in May 2022. The overall buying is low. According to Helixtap market sources, there is limited interest in forward cargoes. 

Some market participants expect China to roll out more policies, including rate cuts, to support the economy. However, the implantation of that is yet to be seen. Moreover, even with any policy support, the impact would take time to trickle into the market. 

Furthermore, Japan’s industrial production also unexpectedly fell 0.4% in April, adding more pressure on the market, indicating some slow upcoming weeks.  

AFR is the only option for China 

Meanwhile, the only cargoes that are finding some interest in China are African rubber. With trades as low as US$1250/mt on a CIF basis, market sources noted that there is a wide range of offers in the market. “Nothing so far; we are just hearing no interest in future shipments, only in ready stocks,” an Africa-based source added.

Meanwhile, given the current level for Asian rubber, there is hardly any scope for them to move into China, which would impact the Asian rubber prices once the current buying fades out. “SIR 20 is stuck for now,” said a producer source.

Decoupling in futures hitting producers hard on LTC bookings

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Weakness in Chinese demand kept the futures under pressure, while some buying from the tire majors kept the prices stable for the day. However, this has made the market participants skeptical of the market way forward. 

Meanwhile, the producers who have sold their long-term contract cargoes are witnessing a huge on the margins. According to Helixtap market sources, it is a better place for the producers who have trading in spot than in term contracts, given the decoupling of the futures and physical prices. 

“Those that signed ltc are suffering right now, and lots of factories, especially in, Indonesia, are trying to sell their factories now,” said a Singapore-based source. 

Indonesian producers booked SIR 20 at a premium in the range of US$50-US$70/mt, which would translate to US$1370-US$1390/mt for August shipments. However, the traded level for SIR 20 during the day for the August shipment was around US$1425/mt, resulting in a gap of around US$30-50/mt.

While the Indonesian producers are already struggling with higher raw material prices, some shortages, and volatile forex, there would be a mid-long term on the country's rubber output.

Meanwhile, there were reports of an ample supply of African rubber in the Chinese market, weighing heavily on both the prices and demand, especially for Asian rubber. In addition, according to market sources, some African cargoes are also moving into China, which adds to the inventory level. 

With Africa into the new season and improved output, adjusting the prices to match the buyer would still be workable for the African producers. However, it is hitting the Thai producers hard as they are witnessing some raw material shortages due to the rains. 

Furthermore, the decoupling of futures and the physical market is also impacting their long-term contracted levels. Thai producers booked STR 20 at a premium in the range of US$40-US$50/mt, which would translate to US$1360-US$1370/mt for August shipments. However, the offer level for STR 20 during the day for the August shipment was around US$1440/mt, which is also the traded level domestically.

 Bear Chinese demand dents into market confidence 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Sluggish Chinese demand dented the physical market sentiment weighing on the prices. However, while the overall demand remained bearish, some regular buying interest for Indonesian rubber kept the prices up and floating. 

The strain in the market largely weighed on the prices for Thai rubber, pushing some producers to sell domestically rather than trade in the overseas market. With the supply of raw materials still tight during heavy rains in the south of Thailand, going domestic is the only way to deal with the pressure on margins. 

Meanwhile, the drop in China's industrial firms in the first four months of 2023 further indicated soft demand amid a faltering economic recovery. In addition, the inventory level continued to rise. According to Helixtap market intelligence, the slack in Chinese demand could last for the next few months. 

This is also detrimental for African rubber; given the slow demand from the European market and the start of the new season, the supply is ample, but only a few markets can park it. The situation is weighing heavily upon the overall sentiment. According to Helixtap market sources, the offers for AFR 10 into China for August are around US$1260/mt on a CIF basis. 

Meanwhile, the prices for Indonesian rubber did not tank, but given the bearish market, the producers are struggling with negative margins. SIR 20 traded remained rangebound between US$1415- US$1425/mt on an FOB basis. However, given the aggressive stance of the Thai and African producers, to stay competitive, the Indonesian producers have to match the market. However, for now, with some buying interest from some tire majors, they are insulated from the plunge for the week.

The summary from our predictive forecasting this week

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Indo prices hold on despite bear market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1295/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1290/mt CIF China, down US$ 10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.75/kg ex-works, up THB 0.5
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 10

There was a slight uptick in Indonesian prices during the Asian trade day, while Thai and African prices held steady. The demand, meanwhile, remained fragile with volatile foreign exchange, which kept the producers' margins under immense pressure. 

The week has been hard for the producers with withering demand and continued absence from China. While some sporadic buying from some tire majors capped the Indonesian prices from a free fall, the situation was different for Thai and African rubber.

 While SIR traded at a slightly higher US$1425/mt on FOB basis, STR offers were around US$1400-US$1420/mt level. African producers held on to their offers during the day as they have seen a significant correction over the week. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and fluctuation in the US dollar is limiting the buying capacity.

Raw material situation dicey 

While Africa is back in full swing, the situation in Indonesia and Thai is still tight. There have been reports of shortfalls in Indonesia, and Thailand has also seen some unseasonal heavy rains. 

"It has been raining. The weather forecast is heavy rainfall from tomorrow in most parts of Thailand until next Thursday. Hopefully, that should temporarily cool down the hot weather,' said a producer source. While the supply of raw materials remained tight in Thailand, they expect to go through a dry spell from June-July, the El Niño effect. 

This, amid a bear market, is weighing heavily upon the margins. As per Helixtap's market intelligence, it's challenging to break even at the current price level and demand situation

SIR retrieves the premium spot, producers paying the price 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, down US$10

Indonesian rubber regained its premium position during the Asian trade day despite the sluggish demand situation. However, the producers are unhappy with the current situation as they lose on both ends.

Even though the traded level for SIR 20 dropped to US$1410/mt on FOB basis for August shipments, it managed to be the most expensive rubber grade in the market at the moment. 

There was a correction in the prices across the board, with producers from all the other regions adjusting the offers downwards to match the buying expectation. 

There was a wide range of offers for STR 20 ranging from US$1400/mt -US$1430/mt on  FOB basis; the situation was similar for African offers as well, which ranged from US$1300/mt -US$1340/mt, CIF basis. Some Thai producers were offering at cost and below to keep the volume moving as they entered the new season.

While Thai and African producers were more reactive to the bear market situation, continued raw material shortage in Indonesia capped their capacity to adjust the prices.

According to Helixtap market sources, most producers in Indonesia are seeing negative margins, especially the ones who sold in long-term contracts. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and appreciation in the US dollar is limiting the buying capacity. 

Increasing nervousness across the world around the impasse in the US debt ceiling talks has kept the market confidence low as a possibility of defaults would raise the likelihood of a recession. In addition, stronger-than-expected British inflation increased the chances of more rate hikes.

Correction in spot continues, producers face double whammy  

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1417.5/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1300/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1260/mt FOB Abidjan, down US$5

A sluggish physical market kept the spot prices under pressure during the Asian trade day. Most sellers were seen adjusting their offers to match the buying expectations. 

The current situation in the physical market is a double whammy for the producers as, on the one hand, the demand is downcast. But, on the other hand, a shortage of raw materials coupled with fluctuation in forex is weighing on the margins. 

SIR 20 traded level during the day dropped to US$1415- US$1420/mt on FOB basis for July and August shipments, while some of the STR offers were as low as US$1410/mt on FOB basis, which, according to some sources, is “aggressive.” “Physical trading pretty much standstill,” said a Singapore-based source. 

While the gap has narrowed between Indo and Thai rubber, African rubber continues to be the most economical option in the market. With Africa right out of wintering, there were some concerns about a glut situation. However, according to Helixtap market sources, the supply glut has yet to hit the market, as it is just the beginning of a new season. Moreover, with El Nino, production, at least in Asian countries, is likely to take a toll. 

Meanwhile, there is hardly any improvement in the Chinese demand situation with limited buying interest. There is ample stock level in Chinese warehouses which has kept them away from the physical market. 

“Chinese onshore prices are even below SICOM,” the Singapore-based source noted, adding the warehouse offer levels are around US$1315/mt. According to Helixtap market sources, all kinds of offers now depend on grades. “Nearby is cheap for China,” another trader source noted. 

In addition, the macro indicators, especially the debt ceiling talk impasse in the US, are also impacting the market sentiment. “Probably more US debt ceiling talks are not going anywhere, and the deadline is coming soon,” noted another Singapore-based source.

Spot prices slide amid lower bids

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, down US$17.5
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$12.5
• Helixtap assessed AFR10 US$1305/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1265/mt FOB Abidjan, down US$5

The market was low on confidence during the Asian trade day amid slowing buying activities weighing on the prices while the shortage of raw materials continued to put the producers on the spot. 

According to Helixtap market sources, the buying activities were muted during the day, and the consumers were unwilling to pay higher. The price competition has intensified after the sharp drop in the African rubber prices as it is out of winter. 

Markets participants were cautious, as the latest talks over the US debt ceiling had a mixed reaction while the deal remained elusive. While the US dollar strengthened, it failed to lend any support for the physical market prices.

In addition, the continued shortage of raw materials in Thailand and Indonesia is wearing the producers down. "There's a shortage of raw materials as tapping is not in full swing after wintering, and on top of that, there are rains. If it weren't for a stronger dollar, prices would be even higher," said a trader source.

The situation is adding more pressure to the producers' margins. SIR 20 traded level during the day dropped to US$1425- US$1430/mt on FOB basis for July and August shipments,

Meanwhile, Japan's manufacturing activity expanded for the first time in seven months in May, indicating signs of growing momentum in the economy post-Covid. Not much activity was seen from China as well during the day. The muted demand continued despite China keeping its benchmark lending rates unchanged in May in an attempt to support the economy.

Asian spot firms up amid weakness in USD

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1445/mt FOB Belawan Surabaya, up US$7.5
• Helixtap assessed STR20 US$1442.5/mt FOB Bangkok Laem Chabang, up US$7.5
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, steady

There was some strength in the Asian physical prices during the day as weakness in the U.S. dollar against the Asian currencies lent some support even though the overall demand remained bearish.

Slight uptick in Indo and Thai spot

There was some uptick in the Indonesian and Thai spot rubber prices, propping the sentiment amid the producers, although the overall demand still remained sluggish. With SIR 20 holding on to its traded level of US$1445/mt on FOB basis for July shipments, STR was reported traded at US$1450-US$1460/mt on FOB basis for August shipments. 

There were reports of some raw material shortages in Indonesia, but due to weather-related disruption, Thailand has also been seeing some raw material shortages. This situation has been capping the producer's capacity to adjust the prices downwards. 

Meanwhile, some weakness in the U.S. dollar against most Asian currencies lent further support to the prices during the day. The U.S. dollar slipped on stalled debt ceiling talks and the Fed chief's unexpected dovish comments over future interest rate hikes. Such an impasse would be detrimental to the demand as some buyers hugged the sidelines during the day. 

In addition, it would also impact the producer's margins limiting their profit booking on the currency differential. Furthermore, with the end of wintering in Africa, there were many competitive African offers in the market. Thus, if the rise in Asian physical prices continues, it would open the arbitrage window for African producers into the Asian market and the advanced economies. 

China's move a sentiment booster

China kept its benchmark lending rates unchanged in May in an attempt to support the economy, which has been losing momentum after the initial post-COVID bounce. While this could boost the domestic market, weakness in Yuan against the U.S. dollar and rising inventory levels in China would mute the interest in international cargoes.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Tussle between Indo- African rubber intensifies

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1432.5/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, steady
• Helixtap assessed SMR20 US$1360/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1300/mt CIF China, down US$ 20

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, steady
• Helixtap assessed Bulk latex US$1040/mt FOB Bangkok Laem Chabang, down US$ 10

Massive correction in the African rubber has put the Indonesian rubber producers in a spot as they tried to adjust their prices to stay competitive. Meanwhile, Thai producers also revised their prices downward to make their way into the international market, especially amid consistent Chinese absence. 

Indo-AFR tussle intensifies 

Indonesian producers were seen adjusting their prices slightly downward during the day amid rising competition from African rubber. According to Helixtap market sources, the Indonesian producers are fighting the African rubber offers now, which are below the US$1300/mt level.

*AFR is implied FOB price

With a major tire maker's return in the market, the pressure on Indonesian producers has intensified. In addition, with Africa now out of wintering, the market is flooded with offers. "Africa is coming out of wintering now, so the offers will get aggressive," said a market source. 

Earlier in the year, the Helixtap AFR 10 (FOB implied) prices were trading at a premium of US$30 to Helixtap SIR 20, which has reversed, and as of May 19, Helixtap AFR 10 (FOB implied) is trading at a discount of US$127.50. 

Some of the African producers are desperate to sell, while the bigger producers can manage the impact. Some small to mid-sized producers are already in the negative margin. Meanwhile, in Indonesia, most of the producers are struggling with negative margins. The current situation will weigh heavily on the physical prices, pushing them south. 

Thailand enters the competition 

Meanwhile, some Thai producers were seen adjusting their offers downward to match the buying expectations. On the other hand, Thailand is seeing some shortage in raw materials. "Market has been dull as before, hardly any trade. Yes indeed, the weather remains very hot and the supply tight," said a producer source. 

Some producers' stance has confused the market participants as they noted that "there are some very aggressive Thai offers in the market." However, according to Helixtap market sources, raw material is short in South Thailand due to rains.

Uptick in Indonesian rubber prices at par with Thai

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1442.5/mt FOB Belawan Surabaya, up US$7.5
• Helixtap assessed STR20 US$1442.5/mt FOB Bangkok Laem Chabang, up US$2.5
• Helixtap assessed AFR10 US$1315/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1275/mt FOB Abidjan, steady

Indonesian prices continued to gather stead during the day, supported by some strong buying interest bringing it to par with Thai rubber prices. However, Indonesian producers could not book profits amid rising raw material prices and appreciation in the Indonesian Rupiah.

SIR 20 traded in the range of US$1440-US$1445/mt on a Fob basis for July shipments and is now at par with Thai rubber. The current situation would impact the arbitrage for Indonesian rubber, especially in markets like China.

However, the producers raised the prices on account of better demand. According to market sources, consumers that are some of the major tire makers are in the market. Thus the buying supported the prices. 

In addition, there is some uptick in the raw material prices. According to a producer source, there is a shortfall in the market which pushed the raw material prices. However, this impacted the producers' margins as they faced a double squeeze from both foreign exchange and raw material prices. 

The situation for the other sources is slightly different, which is seeing some setbacks, especially with the sluggish Chinese demand. As a result, there is hardly any premium while selling into China, which diverted the producers to sell it into the international market. 

Going forward, this might lead to a supply glut situation in the market as Thailand and Africa will be out of wintering, and the buying from the Western market has been sporadic, which might fail to support the physical prices for long.

African rubber prices under duress, rising challenge for Thai and Indo 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1315/mt CFR Hamburg Rotterdam, down US$15
• Helixtap implied AFR10 US$1275/mt FOB Abidjan, down US$15

African rubber prices were southbound during the day amid weak demand, while Indonesian rubber found some support as some major tire makers were back in the market.

African rubber is competitive again

African physical rubber prices were under pressure during the day amid bearish demand. While talks of ample offers of African rubber were making rounds, the producers seem to be in a vulnerable state now. 

“For China, all customers say they are not buying African grade. They seem to be buying Thai grade at the moment,” said an African-based source.

According to Helixtap market sources, there is hardly any demand from China now, and even little clarity from India. Meanwhile, European and US demand has also been sporadic. The offers for AFR 10 were around US$1320-US$1330/mt CIF EU main ports, with some offers at around US$1360/mt.

This has widened the gap between African rubber and other sources. According to Helixtap data, the gap between African and Asian sources ranged between US$35-US$160/mt.

*SMR and SVR prices based on Helixtap assessment May 12, 2023.

This would put Indonesian rubber in a spot as it has been the most competitive option for at least more than six months. While some Indonesian producers were surprised at much lower prices, other sources believed that ample African rubber was available in the market. 

Meanwhile, Africa is coming out of wintering, meaning more volume for raw materials would soon hit the market. However, a source noted that some producers are trying to hold on to their offers, especially the smallholders. “Why are manufacturers dropping prices despite the market not dropping?” a market source noted. 

Indonesia producers worried

With the correction in the African prices, Indonesian producers are in a spot as they struggled with negative margins and raw material shortage. Even though Indonesian prices saw some support during the day as some of the major tire makers were back in the market, the producers are concerned about the rising competition from other sources. 

The gap between Indonesian and Thai rubber has now narrowed to (-)US$5/mt, while with African rubber, it has widened to US$160/mt.

Producers margins under pressure amid bearish demand cues 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1330/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1290 /mt FOB Abidjan, steady

The spot prices treaded sideways during the day, adding more pressure on the producers' margins, especially amid a bearish demand outlook in the short term. In addition, the weak global macro indicators are impacting the sentiments.

While Chinese demand has been muted for some time, the buyers' skepticism kept the market activities muted. There is not much support for buying from the advanced economies as well. "The market is not good, and the international market is not changing much," said a trader source.

While the traded level for SIR 20 held on to their transacted level on US41435/mt on FOB basis for July shipments, the resistance amid the producers is primarily due to some shortage in raw material. While the depreciation in the US dollar should bring in some respite for the producers, the higher raw material prices are nullifying it. 

According to market sources, "no one is making money now," and the margins for most producers across all regions are "negative." However, continued pressure on the prices will likely weed off some smallholders. 

Indonesian raw material supply has been short post-Ramadan, which could indicate that some of the farmers might be opting to transition to other agri crops. Some assumptions in the market are some producers could be holding on to the inventory to lend some support for the prices. However, such a move will only be successful if there is market demand, which is currently missing. 

"We've seen some prices quoted slightly higher, but not sure if the business has been transacted. Futures are also similarly confusing. We saw some spurt last week, but those gains have been almost neutralized," said a Thailand-based source.

Macro indicators are not helping 

Meanwhile, China's April industrial output and retail sales growth declined, suggesting a slowing economy and intensifying pressure on policymakers. Industrial output grew 5.6% in April from a year earlier, as per data released by the National Bureau of Statistics (NBS), which was below market expectations. In addition, weakness in the Eurozone and the US debt ceiling decision also impacted the market sentiment.

Slight uptick on cautious optimism, demand still looks bearish 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1330/mt CFR Hamburg Rotterdam, up US$2.5
• Helixtap implied AFR10 US$1290 /mt FOB Abidjan, up US$2.5

 There was a slight uptick in the spot market amid cautious optimism ahead of the debt ceiling decision in the US and China's move to roll over the interest rates. However, with some buyers sidelined and talks of rising stock levels in China, the outlook for physical demand is bearish. 

Rising stocks level in China 

The rising stock level in China is a major concern in the market. According to market sources, the current stock level in China is the highest in three years. This is majorly impacting physical market sentiment. The overall expectation of the market is the coming months, at least from China, the demand will be sluggish. 

SHFE TSR 20 stock level saw a rise of around 25% month-on-month, indicating a bearish demand situation. According to Helixtap market intelligence, "China is flooded with TSR". However, on the NR side, amid talks of the Chinese government buying new rubber and drought in Yunnan, there was a drop in the SHFR stock level by 3% on a month-on-month basis.

Source: SHFE & Helixtap

Meanwhile, some producer sources noted that some buyers opted to stay on the sidelines, probably to assess the market situation. China's central bank kept the interest rate unchanged, but the market expects further monetary easing in the coming months to support the economic recovery.

On the other hand, US President Joe Biden will be meeting Congressional leaders tomorrow for talks to raise the nation's debt limit to avoid default. However, there is a lot of skepticism around this, further weighing on the buying sentiment.

The summary from our predictive forecasting this week:
 

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Spot mixed around uncertainty on outlook

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1327.5/mt CFR Hamburg Rotterdam, down US$2.5
• Helixtap implied AFR10 US$1287.5/mt FOB Abidjan, down US$2.5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1370/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1320/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment
 

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 15

The spot market remained mixed during the day as the buying was largely muted amid the upswing in the US dollar. In addition, bearish macro cues further sent the market into jitters leading to some skepticism among the market participants.

Renewed economic concerns in the US and tepid Chinese economic data have revived anxieties about demand. The biggest concern is the market is uncertain over whether the current bearishness would sustain or is a temporary economic slowdown. 

SIR 20 traded level further corrected to around US$1430/mt FOB Belawan Surabaya for August shipments, while STR 20 offers were around US$1450/mt on FOB basis. As of April 12, 2023, the gap between Indo-African rubber is around US$142.5/mt on FOB basis, and the Indo-Thai rubber gap is around US$147.5/mt. While the gap between the regions narrowed from last week while the arbitrage window into the Asian market is still there. However, bearish demand is unlikely to increase the inflow of African rubber into the region. 

Meanwhile, the rumor about China restocking is gathering steam. However, some market sources believe that the rumor was a strategy to quell the shorts in the market. The news failed to impact the overall sentiment as ample offers were floating in the market. 

On the raw material front, Indonesian raw material prices continued to hold amid reports of some shortages. A similar situation was reported for Thailand and Africa. “Yes, the season is delayed; there is a shortage of raw material,” said a trader source. However, with both regions coming out of wintering, the situation would ease, likely adding to the pressure on the prices.

Spot slows further, Chinese buying rumours fails to stir action 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1320/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1290/mt FOB Abidjan, down US$20

The bearish trend in the spot market continued as a deflationary jolt from China shook the market confidence as a surge in the US dollar limited the buying capacity. Meanwhile, rumors of the Chinese government buying rubber amid Yunnan's raw material shortage. 

Macro indicators shook market confidence

The factory gate deflation deepened in China, given China's consumer prices rose at the slowest pace in more than two years. The indicators reinforced the signals of lackluster domestic demand. In addition, the deflation in producer prices underscored the strains on factories. This does not sit well for the rubber market as it would further weigh on the physical prices as most of the countries are coming out of winter. 

SIR 20 traded level further corrected to around US$1425-US$1435/mt FOB Belawan Surabaya for July shipments, while STR 20 offers were around US$1450/mt on FOB basis. In addition, the upswing in the US dollar also impacted the buying capacity. Even though it did bring in some breather for the producers, the bearish trend in the physical prices nullified high-profit booking chances. 

Rumors of the Chinese government buying rubber 

Meanwhile, unconfirmed rumors about the Chinese government buying new rubber made rounds in the market. However, it failed to impact the overall sentiment. According to Helixtap market sources, the rumors are unconfirmed at this moment. "SHFE and INE are diverging. WF grade price is resilient due to less-than-optimal tapping in Yunnan, whereas China is flushed with imported TSRs," said a Singapore-based source. 

As per industry sources, the Chinese government is looking to replace its existing stockpile with new stocks. The rumored quantity is around 100,000 mt, which will introduce uncertainty and affect prices according to the market sources.

Spot slows on reports fresh waves of Covid in China 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, steady

The spot rubber rally came to a halt during the day as there was apprehension amid the market participants given the reports of rising Covid cases in China and upcoming US inflation data. As a result, the Asian rubber producers adjusted their offers downward to match the buying expectations.

SIR 20 traded level was around US$1435-US$1440/mt FOB Belawan Surabaya for July and August shipments. Even Thai producers lowered their offers. There was slight bearish sentiment in the market amid some drop in the traded volume. 

However, with no reports of any restrictions implemented, the market expects the second wave to slow down trading efficiency. In addition, there is a lot of anticipation amid the market participants around the US inflation data due later today as it would impact the Fed’s next interest rate decision. 

Meanwhile, on the raw material front, Indonesia continued to see some shortages. According to Helixtap market intelligence, there is some shortage of African and Malaysian cup lumps as well. While some market sources noted earlier this week that there are ample offers for African TSR in the market. The shortage might dry up the supply of raw material, at least in the short term, as Africa would enter the new season soon.

Mixed trend in spot prices, hints of over supply for African rubber

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1445/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, steady

The spot rubber market was mixed during the day as the Indonesian and Thai rubber continued moving north; African rubber is seeing some glut. Meanwhile, bearish global cues kept the market skeptical of the strength in the Asian rubber prices. 

Higher Indo raw material supports SIR prices

Indonesian rubber prices continued to inch up amid rising raw material prices. According to Helixtap market sources, there is some shortage of raw materials, which is trickling into higher SIR prices. As a result, there was a jump in the Indonesian traded level at US$1445/mt FOB Belawan Surabaya for July shipments. In addition, some buying interest from some major tire makers kept the prices buoyant.

“Yes, raw material is an issue for some (producers/processors). They also cannot sell at US$1450-US$1460/mt on FOB basis,” said a Singapore-based source. 

The pre-election uptick in Thailand

Meanwhile, Thai producers continued to hold on to their offers despite bearish demand from China ahead of the elections. A similar trend was seen before the 2019 elections as well as the prices peaked during the month of the election but saw a massive correction after. With Thailand all set to enter the new season and the current bearishness in demand continuing, STR 20 might likely see similar movement in the prices post-2023 general elections.

Supply glut for African rubber

The African rubber prices, however, are under pressure amid talks of oversupply in the market. According to Helixtap market sources, there is some uptick in European buying, but they opted for African rubber as they are the most economical option. “There is so much African rubber in the market that Europe is well covered,” said another Singapore-based source. There are ample offers in the market for AFR 10 ranging from US$1350-US$1400/my CIF EU main ports. Meanwhile, market sources noted that stocks in China for African rubber are also high at around US$1275/mt.

Strong opening for spot weak USD brings some buying back

Helixtap Daily Physical Prices Assessment

• 
  Helixtap assessed SIR20 US$1442.5/mt FOB Belawan Surabaya, up US$22.5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, up US$10

Spot rubber prices saw a strong opening of the week as the weak US dollar brought some buying back, while producers might see some pinch on the margins amid rising factory costs. 

Some weakness in the dollar during the day probed some buying back into the market, leading to some uptick in the prices. Even though the offers for prompt months were still on the lower level, July and August offers saw some uptick across the board. 

There was a significant jump in the Indonesian traded level at US$144-US$1445/mt FOB Belawan Surabaya for July shipments. But lower June offers from dealers capped the uptick in the prices. The hike in Indonesian prices resulted in a narrowing of the Indo-Thai spread to (-) US$2.5 from (-) US$12.5 on May 2, 2023. 

While the hike would offset some of the pressure on the margins, the weakness in the US dollar would impact both factory costs and raw material prices, which have been northbound lately. "Weak USD means higher export prices, and that's an added dampener," said a trader source. 

Meanwhile, on the macro front, the market participants are awaiting the US inflation data this week, which would set the tone for the outlook for US monetary policy.

It would also be interesting to see how much demand churns from China this week, especially amid a 21% rise in SHFE TSR stock level last week compared to the week ending April 7.  According to industry reports, Chinese tire companies' vast production capacity mainly relies on overseas demand as the domestic demand is largely muted.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Spot correction continues, EU demand slowly returning

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1325/mt FOB Ho chi minh, down US$ 40
• Helixtap assessed SMR20 US$1380/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1355/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.5/kg ex-works, down 1 THB
• Helixtap assessed Bulk latex US$1065/mt FOB Bangkok Laem Chabang, up US$ 20

Spot prices saw correction all across the board during the week amid continued bearish global economic cues. However, some buyers were in the market, but with ample offers, the pricing competition intensified. 

Global cues bearish, market jittery 

The market participants were cautious after China posted a dip in factory activities. As a result, the demand from China has been extremely sluggish, and there is hardly any active buying interest during the day. Meanwhile, according to Helixtap market sources, ample offers in the market further weighed on the physical prices. 

There is ample stock at the Chinese warehouses, slowing down the interest in overseas cargoes. Moreover, the local stock cargoes were still cheaper than overseas cargoes. Chinese bonded warehouse cargoes were offered around US$1275/mt, AFR 10 was around 1280/mt on CIF basis, and STR mixture was around US$1370/mt. "Factory activities contraction, stock inventory rising, hardly any positive," said a Singapore-based source.

Meanwhile, European Central Bank raised rates signaling the need for more tightening following the U.S. Federal Reserve hikes. Even though the move was expected, it made the market participants nervous about the economy's outlook. 

Slight improvement in European buying 

There was a slight improvement in European buying. However, the market sources noted that the buyers are cautious, and the demand has increased to an extent. The current buying interest is mainly concentrated on African rubber, given its proximity and the most economical option. 

As of April 5, 2023, the gap between Indo-African rubber is around US$120/mt on FOB basis, and the Thai-African rubber gap is around US$125/mt. This kind of gap opens the arbitrage window into the Asian market as well. 

Meanwhile, despite most of the markets being just out of winter, there are ample offers in the market. Moreover, with the correction in Thai and African raw material prices, the producers of these origins would be better positioned to adjust to the market level.

Indonesian producers, meanwhile, might find it difficult to maintain their popularity amid rising raw material prices. In addition, the appreciation of the Indonesian Rupiah against the U.S. dollar would add more pressure on the margins, which are already negative.

Indo spot northbound while demand still muted

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, up US$10
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1345/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1305/mt FOB Abidjan, down US$5

Indonesian spot rubber prices firmed up during the Asian trade day amid some uptick in raw material prices. Meanwhile, demand was largely muted despite the reopening of all the markets after the Labour Day holidays.

Indonesian rubber surge on higher raw material prices 

There was a slight uptick in Indonesian physical rubber prices. While Indonesian rubber has been the lowest denominator in the premium grade rubber, some uptick in the raw material prices since the beginning of the Ramadan month has been nudging the prices up.

Despite bearish demand, the traded level for SIR 20 during the day marginally improved to US$1425/mt on FOB basis for July shipments. According to Helixtap market sources, higher raw material contributed to the improvement in the prices as there is no support from the demand side yet. 

“Many buyers are side-lined today,” said a Singapore-based source. The possible reason for the stay away would be to assess the exact market situation. Even though the expectation for the week is a sideways movement in the prices, Indonesian rubber did not fit into the bill.

Sources noted a lack of raw materials in the market, which is nudging both cup lumps and processed rubber prices. While this could be the result of the slow return of the farmers post Hari Raya, it could also be the result of the shutdowns over the last year owing to consistent negative margins.

This, however, is resulting in a narrowing gap between Thai and Indo rubber. As most of the Thai sellers opted to hold on to their offers, the gap between SIR and STR narrowed to -US$10/mt during the day. 

The situation could possibly open the arbitrage window for the larger Indonesian producers to import African raw materials to stay competitive. Moreover, amid bearish demand from Europe, the US, and even China, coupled with some over-supply in the market, African physical prices are under pressure. Thus, in the coming weeks, the market might again see some spike in the inflow of African raw materials into Indonesia. 

Macro indicators not promising

Meanwhile, the expected Fed rate hikes failed to stir much reaction in the market. However, rising concerns about inflation and the upcoming possibility of another hike by the ECB kept the buyers jittery. Making the situation gloomier was the dip in Chinese factory activities. Post a rally in exports in March, there was an expectation of the slowdown in April as most of these orders were part of the backlog. 

In addition, domestic demand remained sluggish, with limited hope for exports as the Western market still struggled with economic turmoil. These factors will likely impact both demand and sentiment for rubber in the coming weeks.

Spot slides amid limited buying 

Helixtap Daily Physical Prices Assessment

• 
  Helixtap assessed SIR20 US$1415/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, down US$15

With holidays in China and Japan, the market activities were largely sluggish, weighing on the spot prices during the Asian trade day. The market participants await clarity after China returns.

China has been sluggish for the past week due to the higher stock level. SHFE TSR stock rose 35% over April, indicating sluggish domestic demand and a slowing export market. Even though before the holidays, there was some active buying from some of the tire majors. However, amid the expectations of rate hikes by the ECB and Fed, the buyers are cautious.

Meanwhile, the spot prices saw some correction. The traded level for SIR 20 was US$1415/mt on FOB basis for July shipments, with buying interest at around US$1410/mt. Thai producers were also seen adjusting their offers lower. However, the gap between Indo-Thai prices continued to widen to (-) US$15/mt. 

On the other hand, appreciation in the Asian currencies against the US dollar is weighing on the producer’s margins. Some market participants feel the pressure on the prices would possibly ease once the buyers return tomorrow. There has been some uptick in the raw material prices in Thailand before the election and reports of extended wintering. Meanwhile, in Indonesia, too, farmgate prices saw some uptick. This is likely to open the arbitrage for African raw material into Indonesia again as Africa is towards the end of the wintering.

Slow opening for spot with China on holiday

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1422.5/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$15
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$15

The sluggish note in the spot market continued amid the limited buying interest and with China and Japan on holiday. While the producers tried to hold on to the offers, the market participants waited for more clarity once China came back.

"The market is very quiet currently, especially with China shut," said a producer source. As a result, the activities were largely muted. However, owing to the northward bias in the raw material prices, the producers opted to hold on to their prices. The traded level for SIR 20 was US$1420- US$1425/mt on FOB basis for July shipments, largely rangebound.

The STR 20 offers were also at similar levels as last week, as per Helixtap's market intelligence. However, some sources noted that the Thai prices were "firmish" during the day ahead of the elections. However, amid sluggish European demand and holidays in China, African rubber prices were under pressure. In addition, some prompt offers in the market also indicated that some producers could be willing to liquidate stock, further adding to the downward bias on the African prices. 

Meanwhile, IMF raised Asia's economic forecast on banking on China's recovery. However, inflationary pressure and concerns of the economy tipping into a recession would impact the sentiment, especially for Western countries. ECB is expected to raise rates, and Fed will likely follow suit. As a result, prices and demand will stay volatile in the coming weeks.

Price Signals:

MA (moving average)

SIR20: 50MA moving closer to the 200MA, after 20MA crossed 200MA in late April. This suggests likely upward price pressure for SIR20 in the near term.

STR20: Such an upward price pressure is even clearer for STR20 as both 20MA and 50MA crossed 200MA in late April. The last time both 20MA and 50MA were above 200MA was in April last year. Then prices were above USD$1,800/t.

SICOM TSR20: Unlike physical rubber prices, SICOM TSR20 is still some way off 200MA but 20MA has crossed over 50MA slightly, suggesting upward price pressure in the short term.

Differentials:

SIR20 vs SICOM TSR20 P2 (second month out) : Differential above $50/t since early April, reaching a high last week before coming downward slightly to around $74/t last week. Such a figure is quite high for the month of April.

STR20 vs SICOM TSR 20 P2 (second month out): Similar trends are observed for Thai differential as well but the Thai differential is more volatile, moving up and down in consecutive days more often than the Indonesian differential. The Thai differential was also higher at around $86/t last week, higher than most of April.
 

The summary from our predictive forecasting this week:
 

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Indo prices hold on despite bear market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1295/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1290/mt CIF China, down US$ 10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.75/kg ex-works, up THB 0.5
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 10

There was a slight uptick in Indonesian prices during the Asian trade day, while Thai and African prices held steady. The demand, meanwhile, remained fragile with volatile foreign exchange, which kept the producers' margins under immense pressure. 

The week has been hard for the producers with withering demand and continued absence from China. While some sporadic buying from some tire majors capped the Indonesian prices from a free fall, the situation was different for Thai and African rubber.

 While SIR traded at a slightly higher US$1425/mt on FOB basis, STR offers were around US$1400-US$1420/mt level. African producers held on to their offers during the day as they have seen a significant correction over the week. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and fluctuation in the US dollar is limiting the buying capacity.

Raw material situation dicey 

While Africa is back in full swing, the situation in Indonesia and Thai is still tight. There have been reports of shortfalls in Indonesia, and Thailand has also seen some unseasonal heavy rains. 

"It has been raining. The weather forecast is heavy rainfall from tomorrow in most parts of Thailand until next Thursday. Hopefully, that should temporarily cool down the hot weather,' said a producer source. While the supply of raw materials remained tight in Thailand, they expect to go through a dry spell from June-July, the El Niño effect. 

This, amid a bear market, is weighing heavily upon the margins. As per Helixtap's market intelligence, it's challenging to break even at the current price level and demand situation

Tussle between Indo- African rubber intensifies

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1432.5/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, steady
• Helixtap assessed SMR20 US$1360/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1300/mt CIF China, down US$ 20

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, steady
• Helixtap assessed Bulk latex US$1040/mt FOB Bangkok Laem Chabang, down US$ 10

Massive correction in the African rubber has put the Indonesian rubber producers in a spot as they tried to adjust their prices to stay competitive. Meanwhile, Thai producers also revised their prices downward to make their way into the international market, especially amid consistent Chinese absence. 

Indo-AFR tussle intensifies 

Indonesian producers were seen adjusting their prices slightly downward during the day amid rising competition from African rubber. According to Helixtap market sources, the Indonesian producers are fighting the African rubber offers now, which are below the US$1300/mt level.

*AFR is implied FOB price

With a major tire maker's return in the market, the pressure on Indonesian producers has intensified. In addition, with Africa now out of wintering, the market is flooded with offers. "Africa is coming out of wintering now, so the offers will get aggressive," said a market source. 

Earlier in the year, the Helixtap AFR 10 (FOB implied) prices were trading at a premium of US$30 to Helixtap SIR 20, which has reversed, and as of May 19, Helixtap AFR 10 (FOB implied) is trading at a discount of US$127.50. 

Some of the African producers are desperate to sell, while the bigger producers can manage the impact. Some small to mid-sized producers are already in the negative margin. Meanwhile, in Indonesia, most of the producers are struggling with negative margins. The current situation will weigh heavily on the physical prices, pushing them south. 

Thailand enters the competition 

Meanwhile, some Thai producers were seen adjusting their offers downward to match the buying expectations. On the other hand, Thailand is seeing some shortage in raw materials. "Market has been dull as before, hardly any trade. Yes indeed, the weather remains very hot and the supply tight," said a producer source. 

Some producers' stance has confused the market participants as they noted that "there are some very aggressive Thai offers in the market." However, according to Helixtap market sources, raw material is short in South Thailand due to rains.

Spot mixed around uncertainty on outlook

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1327.5/mt CFR Hamburg Rotterdam, down US$2.5
• Helixtap implied AFR10 US$1287.5/mt FOB Abidjan, down US$2.5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1370/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1320/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment
 

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 15

The spot market remained mixed during the day as the buying was largely muted amid the upswing in the US dollar. In addition, bearish macro cues further sent the market into jitters leading to some skepticism among the market participants.

Renewed economic concerns in the US and tepid Chinese economic data have revived anxieties about demand. The biggest concern is the market is uncertain over whether the current bearishness would sustain or is a temporary economic slowdown. 

SIR 20 traded level further corrected to around US$1430/mt FOB Belawan Surabaya for August shipments, while STR 20 offers were around US$1450/mt on FOB basis. As of April 12, 2023, the gap between Indo-African rubber is around US$142.5/mt on FOB basis, and the Indo-Thai rubber gap is around US$147.5/mt. While the gap between the regions narrowed from last week while the arbitrage window into the Asian market is still there. However, bearish demand is unlikely to increase the inflow of African rubber into the region. 

Meanwhile, the rumor about China restocking is gathering steam. However, some market sources believe that the rumor was a strategy to quell the shorts in the market. The news failed to impact the overall sentiment as ample offers were floating in the market. 

On the raw material front, Indonesian raw material prices continued to hold amid reports of some shortages. A similar situation was reported for Thailand and Africa. “Yes, the season is delayed; there is a shortage of raw material,” said a trader source. However, with both regions coming out of wintering, the situation would ease, likely adding to the pressure on the prices.

Spot correction continues, EU demand slowly returning

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1325/mt FOB Ho chi minh, down US$ 40
• Helixtap assessed SMR20 US$1380/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1355/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.5/kg ex-works, down 1 THB
• Helixtap assessed Bulk latex US$1065/mt FOB Bangkok Laem Chabang, up US$ 20

Spot prices saw correction all across the board during the week amid continued bearish global economic cues. However, some buyers were in the market, but with ample offers, the pricing competition intensified. 

Global cues bearish, market jittery 

The market participants were cautious after China posted a dip in factory activities. As a result, the demand from China has been extremely sluggish, and there is hardly any active buying interest during the day. Meanwhile, according to Helixtap market sources, ample offers in the market further weighed on the physical prices. 

There is ample stock at the Chinese warehouses, slowing down the interest in overseas cargoes. Moreover, the local stock cargoes were still cheaper than overseas cargoes. Chinese bonded warehouse cargoes were offered around US$1275/mt, AFR 10 was around 1280/mt on CIF basis, and STR mixture was around US$1370/mt. "Factory activities contraction, stock inventory rising, hardly any positive," said a Singapore-based source.

Meanwhile, European Central Bank raised rates signaling the need for more tightening following the U.S. Federal Reserve hikes. Even though the move was expected, it made the market participants nervous about the economy's outlook. 

Slight improvement in European buying 

There was a slight improvement in European buying. However, the market sources noted that the buyers are cautious, and the demand has increased to an extent. The current buying interest is mainly concentrated on African rubber, given its proximity and the most economical option. 

As of April 5, 2023, the gap between Indo-African rubber is around US$120/mt on FOB basis, and the Thai-African rubber gap is around US$125/mt. This kind of gap opens the arbitrage window into the Asian market as well. 

Meanwhile, despite most of the markets being just out of winter, there are ample offers in the market. Moreover, with the correction in Thai and African raw material prices, the producers of these origins would be better positioned to adjust to the market level.

Indonesian producers, meanwhile, might find it difficult to maintain their popularity amid rising raw material prices. In addition, the appreciation of the Indonesian Rupiah against the U.S. dollar would add more pressure on the margins, which are already negative.

Weakness in African prices weighing on physical market sentiment

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1415/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, steady

The physical prices steadied during the day with Indonesia on holiday, and other producers tried to match the market level given the correction in the African rubber prices. However, China continued to remain sluggish. 

The traded level for SIR 20 during the day for the August shipment remained steady at US$1420/mt. However, Thai producers were trying to match the market level, with some producers even selling at the cost. According to Helixtap market sources, the offer level for STR 20 was around US$1320-US$1430/mt on FOB basis, with some lower offers as low as US$1400/mt. 

According to Helixtap market intelligence, producers struggled to sell in the international market as most buyers were sidelined. This has resulted in the narrowing gap between the Indo and Thai prices. As of June 1, 2023, the gap between SIR 20 and STR 20 is around (-)US$5/mt. 

The Chinese buying continued to remain sluggish. Only the cheapest options are finding their way into the Chinese market, said a Singapore-based source, 

The buyers are now in a very safe spot as they have options in the market. However, amid the existing weakness in the global economy, the overall buying is large as on when required. This is because the market at the moment is focused on broad macro trends. 

While the suspension of the US debt ceiling has lowered the chances of a hike in interest rates by the Fed, China’s weak PMI data is weighing heavily on the sentiment. In addition, sluggish global demand deepened with the decline in European manufacturing activity, which would pose a major challenge for the physical rubber market

Weak Chinese data weighs on physical market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1415/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, down US$10

The physical prices took a hit during the Asian trade day as weak Chinese PMI data weighed on the market confidence. While international buying capped the slide, African rubber prices are still under pressure.

Chinese data impacts the sentiment. 

With all indicators implying weakness in the Chinese economy, Chinese manufacturing activity weakened more than expected in May. The news took a toll on the physical market sentiment pulling the prices down. 

The traded level for SIR 20 during the day for the August shipment dropped to US$1420/mt. The slide, however, was capped by the international buying interest coupled with raw material shortages.

“China data is not looking good. Showing demand still weak,” said a Singapore-based source. 

The official manufacturing PMI fell to 48.8, the lowest since December. The buying in China has been sluggish for quite some time especially post the initial post-Covid relaxation rebound faded. 

In addition, talks of higher inventory level, even though the average SHFE inventory level for May 2023, until the week ending May 26, is around 53% lower than the stock level in May 2022. The overall buying is low. According to Helixtap market sources, there is limited interest in forward cargoes. 

Some market participants expect China to roll out more policies, including rate cuts, to support the economy. However, the implantation of that is yet to be seen. Moreover, even with any policy support, the impact would take time to trickle into the market. 

Furthermore, Japan’s industrial production also unexpectedly fell 0.4% in April, adding more pressure on the market, indicating some slow upcoming weeks.  

AFR is the only option for China 

Meanwhile, the only cargoes that are finding some interest in China are African rubber. With trades as low as US$1250/mt on a CIF basis, market sources noted that there is a wide range of offers in the market. “Nothing so far; we are just hearing no interest in future shipments, only in ready stocks,” an Africa-based source added.

Meanwhile, given the current level for Asian rubber, there is hardly any scope for them to move into China, which would impact the Asian rubber prices once the current buying fades out. “SIR 20 is stuck for now,” said a producer source.

Decoupling in futures hitting producers hard on LTC bookings

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Weakness in Chinese demand kept the futures under pressure, while some buying from the tire majors kept the prices stable for the day. However, this has made the market participants skeptical of the market way forward. 

Meanwhile, the producers who have sold their long-term contract cargoes are witnessing a huge on the margins. According to Helixtap market sources, it is a better place for the producers who have trading in spot than in term contracts, given the decoupling of the futures and physical prices. 

“Those that signed ltc are suffering right now, and lots of factories, especially in, Indonesia, are trying to sell their factories now,” said a Singapore-based source. 

Indonesian producers booked SIR 20 at a premium in the range of US$50-US$70/mt, which would translate to US$1370-US$1390/mt for August shipments. However, the traded level for SIR 20 during the day for the August shipment was around US$1425/mt, resulting in a gap of around US$30-50/mt.

While the Indonesian producers are already struggling with higher raw material prices, some shortages, and volatile forex, there would be a mid-long term on the country's rubber output.

Meanwhile, there were reports of an ample supply of African rubber in the Chinese market, weighing heavily on both the prices and demand, especially for Asian rubber. In addition, according to market sources, some African cargoes are also moving into China, which adds to the inventory level. 

With Africa into the new season and improved output, adjusting the prices to match the buyer would still be workable for the African producers. However, it is hitting the Thai producers hard as they are witnessing some raw material shortages due to the rains. 

Furthermore, the decoupling of futures and the physical market is also impacting their long-term contracted levels. Thai producers booked STR 20 at a premium in the range of US$40-US$50/mt, which would translate to US$1360-US$1370/mt for August shipments. However, the offer level for STR 20 during the day for the August shipment was around US$1440/mt, which is also the traded level domestically.

 Bear Chinese demand dents into market confidence 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Sluggish Chinese demand dented the physical market sentiment weighing on the prices. However, while the overall demand remained bearish, some regular buying interest for Indonesian rubber kept the prices up and floating. 

The strain in the market largely weighed on the prices for Thai rubber, pushing some producers to sell domestically rather than trade in the overseas market. With the supply of raw materials still tight during heavy rains in the south of Thailand, going domestic is the only way to deal with the pressure on margins. 

Meanwhile, the drop in China's industrial firms in the first four months of 2023 further indicated soft demand amid a faltering economic recovery. In addition, the inventory level continued to rise. According to Helixtap market intelligence, the slack in Chinese demand could last for the next few months. 

This is also detrimental for African rubber; given the slow demand from the European market and the start of the new season, the supply is ample, but only a few markets can park it. The situation is weighing heavily upon the overall sentiment. According to Helixtap market sources, the offers for AFR 10 into China for August are around US$1260/mt on a CIF basis. 

Meanwhile, the prices for Indonesian rubber did not tank, but given the bearish market, the producers are struggling with negative margins. SIR 20 traded remained rangebound between US$1415- US$1425/mt on an FOB basis. However, given the aggressive stance of the Thai and African producers, to stay competitive, the Indonesian producers have to match the market. However, for now, with some buying interest from some tire majors, they are insulated from the plunge for the week.

The summary from our predictive forecasting this week

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Indo prices hold on despite bear market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1295/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1290/mt CIF China, down US$ 10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.75/kg ex-works, up THB 0.5
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 10

There was a slight uptick in Indonesian prices during the Asian trade day, while Thai and African prices held steady. The demand, meanwhile, remained fragile with volatile foreign exchange, which kept the producers' margins under immense pressure. 

The week has been hard for the producers with withering demand and continued absence from China. While some sporadic buying from some tire majors capped the Indonesian prices from a free fall, the situation was different for Thai and African rubber.

 While SIR traded at a slightly higher US$1425/mt on FOB basis, STR offers were around US$1400-US$1420/mt level. African producers held on to their offers during the day as they have seen a significant correction over the week. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and fluctuation in the US dollar is limiting the buying capacity.

Raw material situation dicey 

While Africa is back in full swing, the situation in Indonesia and Thai is still tight. There have been reports of shortfalls in Indonesia, and Thailand has also seen some unseasonal heavy rains. 

"It has been raining. The weather forecast is heavy rainfall from tomorrow in most parts of Thailand until next Thursday. Hopefully, that should temporarily cool down the hot weather,' said a producer source. While the supply of raw materials remained tight in Thailand, they expect to go through a dry spell from June-July, the El Niño effect. 

This, amid a bear market, is weighing heavily upon the margins. As per Helixtap's market intelligence, it's challenging to break even at the current price level and demand situation

SIR retrieves the premium spot, producers paying the price 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, down US$10

Indonesian rubber regained its premium position during the Asian trade day despite the sluggish demand situation. However, the producers are unhappy with the current situation as they lose on both ends.

Even though the traded level for SIR 20 dropped to US$1410/mt on FOB basis for August shipments, it managed to be the most expensive rubber grade in the market at the moment. 

There was a correction in the prices across the board, with producers from all the other regions adjusting the offers downwards to match the buying expectation. 

There was a wide range of offers for STR 20 ranging from US$1400/mt -US$1430/mt on  FOB basis; the situation was similar for African offers as well, which ranged from US$1300/mt -US$1340/mt, CIF basis. Some Thai producers were offering at cost and below to keep the volume moving as they entered the new season.

While Thai and African producers were more reactive to the bear market situation, continued raw material shortage in Indonesia capped their capacity to adjust the prices.

According to Helixtap market sources, most producers in Indonesia are seeing negative margins, especially the ones who sold in long-term contracts. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and appreciation in the US dollar is limiting the buying capacity. 

Increasing nervousness across the world around the impasse in the US debt ceiling talks has kept the market confidence low as a possibility of defaults would raise the likelihood of a recession. In addition, stronger-than-expected British inflation increased the chances of more rate hikes.

Correction in spot continues, producers face double whammy  

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1417.5/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1420/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1300/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1260/mt FOB Abidjan, down US$5

A sluggish physical market kept the spot prices under pressure during the Asian trade day. Most sellers were seen adjusting their offers to match the buying expectations. 

The current situation in the physical market is a double whammy for the producers as, on the one hand, the demand is downcast. But, on the other hand, a shortage of raw materials coupled with fluctuation in forex is weighing on the margins. 

SIR 20 traded level during the day dropped to US$1415- US$1420/mt on FOB basis for July and August shipments, while some of the STR offers were as low as US$1410/mt on FOB basis, which, according to some sources, is “aggressive.” “Physical trading pretty much standstill,” said a Singapore-based source. 

While the gap has narrowed between Indo and Thai rubber, African rubber continues to be the most economical option in the market. With Africa right out of wintering, there were some concerns about a glut situation. However, according to Helixtap market sources, the supply glut has yet to hit the market, as it is just the beginning of a new season. Moreover, with El Nino, production, at least in Asian countries, is likely to take a toll. 

Meanwhile, there is hardly any improvement in the Chinese demand situation with limited buying interest. There is ample stock level in Chinese warehouses which has kept them away from the physical market. 

“Chinese onshore prices are even below SICOM,” the Singapore-based source noted, adding the warehouse offer levels are around US$1315/mt. According to Helixtap market sources, all kinds of offers now depend on grades. “Nearby is cheap for China,” another trader source noted. 

In addition, the macro indicators, especially the debt ceiling talk impasse in the US, are also impacting the market sentiment. “Probably more US debt ceiling talks are not going anywhere, and the deadline is coming soon,” noted another Singapore-based source.

Spot prices slide amid lower bids

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, down US$17.5
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$12.5
• Helixtap assessed AFR10 US$1305/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1265/mt FOB Abidjan, down US$5

The market was low on confidence during the Asian trade day amid slowing buying activities weighing on the prices while the shortage of raw materials continued to put the producers on the spot. 

According to Helixtap market sources, the buying activities were muted during the day, and the consumers were unwilling to pay higher. The price competition has intensified after the sharp drop in the African rubber prices as it is out of winter. 

Markets participants were cautious, as the latest talks over the US debt ceiling had a mixed reaction while the deal remained elusive. While the US dollar strengthened, it failed to lend any support for the physical market prices.

In addition, the continued shortage of raw materials in Thailand and Indonesia is wearing the producers down. "There's a shortage of raw materials as tapping is not in full swing after wintering, and on top of that, there are rains. If it weren't for a stronger dollar, prices would be even higher," said a trader source.

The situation is adding more pressure to the producers' margins. SIR 20 traded level during the day dropped to US$1425- US$1430/mt on FOB basis for July and August shipments,

Meanwhile, Japan's manufacturing activity expanded for the first time in seven months in May, indicating signs of growing momentum in the economy post-Covid. Not much activity was seen from China as well during the day. The muted demand continued despite China keeping its benchmark lending rates unchanged in May in an attempt to support the economy.

Asian spot firms up amid weakness in USD

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1445/mt FOB Belawan Surabaya, up US$7.5
• Helixtap assessed STR20 US$1442.5/mt FOB Bangkok Laem Chabang, up US$7.5
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, steady

There was some strength in the Asian physical prices during the day as weakness in the U.S. dollar against the Asian currencies lent some support even though the overall demand remained bearish.

Slight uptick in Indo and Thai spot

There was some uptick in the Indonesian and Thai spot rubber prices, propping the sentiment amid the producers, although the overall demand still remained sluggish. With SIR 20 holding on to its traded level of US$1445/mt on FOB basis for July shipments, STR was reported traded at US$1450-US$1460/mt on FOB basis for August shipments. 

There were reports of some raw material shortages in Indonesia, but due to weather-related disruption, Thailand has also been seeing some raw material shortages. This situation has been capping the producer's capacity to adjust the prices downwards. 

Meanwhile, some weakness in the U.S. dollar against most Asian currencies lent further support to the prices during the day. The U.S. dollar slipped on stalled debt ceiling talks and the Fed chief's unexpected dovish comments over future interest rate hikes. Such an impasse would be detrimental to the demand as some buyers hugged the sidelines during the day. 

In addition, it would also impact the producer's margins limiting their profit booking on the currency differential. Furthermore, with the end of wintering in Africa, there were many competitive African offers in the market. Thus, if the rise in Asian physical prices continues, it would open the arbitrage window for African producers into the Asian market and the advanced economies. 

China's move a sentiment booster

China kept its benchmark lending rates unchanged in May in an attempt to support the economy, which has been losing momentum after the initial post-COVID bounce. While this could boost the domestic market, weakness in Yuan against the U.S. dollar and rising inventory levels in China would mute the interest in international cargoes.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Tussle between Indo- African rubber intensifies

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1432.5/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, steady
• Helixtap assessed SMR20 US$1360/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1300/mt CIF China, down US$ 20

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, steady
• Helixtap assessed Bulk latex US$1040/mt FOB Bangkok Laem Chabang, down US$ 10

Massive correction in the African rubber has put the Indonesian rubber producers in a spot as they tried to adjust their prices to stay competitive. Meanwhile, Thai producers also revised their prices downward to make their way into the international market, especially amid consistent Chinese absence. 

Indo-AFR tussle intensifies 

Indonesian producers were seen adjusting their prices slightly downward during the day amid rising competition from African rubber. According to Helixtap market sources, the Indonesian producers are fighting the African rubber offers now, which are below the US$1300/mt level.

*AFR is implied FOB price

With a major tire maker's return in the market, the pressure on Indonesian producers has intensified. In addition, with Africa now out of wintering, the market is flooded with offers. "Africa is coming out of wintering now, so the offers will get aggressive," said a market source. 

Earlier in the year, the Helixtap AFR 10 (FOB implied) prices were trading at a premium of US$30 to Helixtap SIR 20, which has reversed, and as of May 19, Helixtap AFR 10 (FOB implied) is trading at a discount of US$127.50. 

Some of the African producers are desperate to sell, while the bigger producers can manage the impact. Some small to mid-sized producers are already in the negative margin. Meanwhile, in Indonesia, most of the producers are struggling with negative margins. The current situation will weigh heavily on the physical prices, pushing them south. 

Thailand enters the competition 

Meanwhile, some Thai producers were seen adjusting their offers downward to match the buying expectations. On the other hand, Thailand is seeing some shortage in raw materials. "Market has been dull as before, hardly any trade. Yes indeed, the weather remains very hot and the supply tight," said a producer source. 

Some producers' stance has confused the market participants as they noted that "there are some very aggressive Thai offers in the market." However, according to Helixtap market sources, raw material is short in South Thailand due to rains.

Uptick in Indonesian rubber prices at par with Thai

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1442.5/mt FOB Belawan Surabaya, up US$7.5
• Helixtap assessed STR20 US$1442.5/mt FOB Bangkok Laem Chabang, up US$2.5
• Helixtap assessed AFR10 US$1315/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1275/mt FOB Abidjan, steady

Indonesian prices continued to gather stead during the day, supported by some strong buying interest bringing it to par with Thai rubber prices. However, Indonesian producers could not book profits amid rising raw material prices and appreciation in the Indonesian Rupiah.

SIR 20 traded in the range of US$1440-US$1445/mt on a Fob basis for July shipments and is now at par with Thai rubber. The current situation would impact the arbitrage for Indonesian rubber, especially in markets like China.

However, the producers raised the prices on account of better demand. According to market sources, consumers that are some of the major tire makers are in the market. Thus the buying supported the prices. 

In addition, there is some uptick in the raw material prices. According to a producer source, there is a shortfall in the market which pushed the raw material prices. However, this impacted the producers' margins as they faced a double squeeze from both foreign exchange and raw material prices. 

The situation for the other sources is slightly different, which is seeing some setbacks, especially with the sluggish Chinese demand. As a result, there is hardly any premium while selling into China, which diverted the producers to sell it into the international market. 

Going forward, this might lead to a supply glut situation in the market as Thailand and Africa will be out of wintering, and the buying from the Western market has been sporadic, which might fail to support the physical prices for long.

African rubber prices under duress, rising challenge for Thai and Indo 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1315/mt CFR Hamburg Rotterdam, down US$15
• Helixtap implied AFR10 US$1275/mt FOB Abidjan, down US$15

African rubber prices were southbound during the day amid weak demand, while Indonesian rubber found some support as some major tire makers were back in the market.

African rubber is competitive again

African physical rubber prices were under pressure during the day amid bearish demand. While talks of ample offers of African rubber were making rounds, the producers seem to be in a vulnerable state now. 

“For China, all customers say they are not buying African grade. They seem to be buying Thai grade at the moment,” said an African-based source.

According to Helixtap market sources, there is hardly any demand from China now, and even little clarity from India. Meanwhile, European and US demand has also been sporadic. The offers for AFR 10 were around US$1320-US$1330/mt CIF EU main ports, with some offers at around US$1360/mt.

This has widened the gap between African rubber and other sources. According to Helixtap data, the gap between African and Asian sources ranged between US$35-US$160/mt.

*SMR and SVR prices based on Helixtap assessment May 12, 2023.

This would put Indonesian rubber in a spot as it has been the most competitive option for at least more than six months. While some Indonesian producers were surprised at much lower prices, other sources believed that ample African rubber was available in the market. 

Meanwhile, Africa is coming out of wintering, meaning more volume for raw materials would soon hit the market. However, a source noted that some producers are trying to hold on to their offers, especially the smallholders. “Why are manufacturers dropping prices despite the market not dropping?” a market source noted. 

Indonesia producers worried

With the correction in the African prices, Indonesian producers are in a spot as they struggled with negative margins and raw material shortage. Even though Indonesian prices saw some support during the day as some of the major tire makers were back in the market, the producers are concerned about the rising competition from other sources. 

The gap between Indonesian and Thai rubber has now narrowed to (-)US$5/mt, while with African rubber, it has widened to US$160/mt.

Producers margins under pressure amid bearish demand cues 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1330/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1290 /mt FOB Abidjan, steady

The spot prices treaded sideways during the day, adding more pressure on the producers' margins, especially amid a bearish demand outlook in the short term. In addition, the weak global macro indicators are impacting the sentiments.

While Chinese demand has been muted for some time, the buyers' skepticism kept the market activities muted. There is not much support for buying from the advanced economies as well. "The market is not good, and the international market is not changing much," said a trader source.

While the traded level for SIR 20 held on to their transacted level on US41435/mt on FOB basis for July shipments, the resistance amid the producers is primarily due to some shortage in raw material. While the depreciation in the US dollar should bring in some respite for the producers, the higher raw material prices are nullifying it. 

According to market sources, "no one is making money now," and the margins for most producers across all regions are "negative." However, continued pressure on the prices will likely weed off some smallholders. 

Indonesian raw material supply has been short post-Ramadan, which could indicate that some of the farmers might be opting to transition to other agri crops. Some assumptions in the market are some producers could be holding on to the inventory to lend some support for the prices. However, such a move will only be successful if there is market demand, which is currently missing. 

"We've seen some prices quoted slightly higher, but not sure if the business has been transacted. Futures are also similarly confusing. We saw some spurt last week, but those gains have been almost neutralized," said a Thailand-based source.

Macro indicators are not helping 

Meanwhile, China's April industrial output and retail sales growth declined, suggesting a slowing economy and intensifying pressure on policymakers. Industrial output grew 5.6% in April from a year earlier, as per data released by the National Bureau of Statistics (NBS), which was below market expectations. In addition, weakness in the Eurozone and the US debt ceiling decision also impacted the market sentiment.

Slight uptick on cautious optimism, demand still looks bearish 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1330/mt CFR Hamburg Rotterdam, up US$2.5
• Helixtap implied AFR10 US$1290 /mt FOB Abidjan, up US$2.5

 There was a slight uptick in the spot market amid cautious optimism ahead of the debt ceiling decision in the US and China's move to roll over the interest rates. However, with some buyers sidelined and talks of rising stock levels in China, the outlook for physical demand is bearish. 

Rising stocks level in China 

The rising stock level in China is a major concern in the market. According to market sources, the current stock level in China is the highest in three years. This is majorly impacting physical market sentiment. The overall expectation of the market is the coming months, at least from China, the demand will be sluggish. 

SHFE TSR 20 stock level saw a rise of around 25% month-on-month, indicating a bearish demand situation. According to Helixtap market intelligence, "China is flooded with TSR". However, on the NR side, amid talks of the Chinese government buying new rubber and drought in Yunnan, there was a drop in the SHFR stock level by 3% on a month-on-month basis.

Source: SHFE & Helixtap

Meanwhile, some producer sources noted that some buyers opted to stay on the sidelines, probably to assess the market situation. China's central bank kept the interest rate unchanged, but the market expects further monetary easing in the coming months to support the economic recovery.

On the other hand, US President Joe Biden will be meeting Congressional leaders tomorrow for talks to raise the nation's debt limit to avoid default. However, there is a lot of skepticism around this, further weighing on the buying sentiment.

The summary from our predictive forecasting this week:
 

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Spot mixed around uncertainty on outlook

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1327.5/mt CFR Hamburg Rotterdam, down US$2.5
• Helixtap implied AFR10 US$1287.5/mt FOB Abidjan, down US$2.5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1370/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1320/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment
 

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 15

The spot market remained mixed during the day as the buying was largely muted amid the upswing in the US dollar. In addition, bearish macro cues further sent the market into jitters leading to some skepticism among the market participants.

Renewed economic concerns in the US and tepid Chinese economic data have revived anxieties about demand. The biggest concern is the market is uncertain over whether the current bearishness would sustain or is a temporary economic slowdown. 

SIR 20 traded level further corrected to around US$1430/mt FOB Belawan Surabaya for August shipments, while STR 20 offers were around US$1450/mt on FOB basis. As of April 12, 2023, the gap between Indo-African rubber is around US$142.5/mt on FOB basis, and the Indo-Thai rubber gap is around US$147.5/mt. While the gap between the regions narrowed from last week while the arbitrage window into the Asian market is still there. However, bearish demand is unlikely to increase the inflow of African rubber into the region. 

Meanwhile, the rumor about China restocking is gathering steam. However, some market sources believe that the rumor was a strategy to quell the shorts in the market. The news failed to impact the overall sentiment as ample offers were floating in the market. 

On the raw material front, Indonesian raw material prices continued to hold amid reports of some shortages. A similar situation was reported for Thailand and Africa. “Yes, the season is delayed; there is a shortage of raw material,” said a trader source. However, with both regions coming out of wintering, the situation would ease, likely adding to the pressure on the prices.

Spot slows further, Chinese buying rumours fails to stir action 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1320/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1290/mt FOB Abidjan, down US$20

The bearish trend in the spot market continued as a deflationary jolt from China shook the market confidence as a surge in the US dollar limited the buying capacity. Meanwhile, rumors of the Chinese government buying rubber amid Yunnan's raw material shortage. 

Macro indicators shook market confidence

The factory gate deflation deepened in China, given China's consumer prices rose at the slowest pace in more than two years. The indicators reinforced the signals of lackluster domestic demand. In addition, the deflation in producer prices underscored the strains on factories. This does not sit well for the rubber market as it would further weigh on the physical prices as most of the countries are coming out of winter. 

SIR 20 traded level further corrected to around US$1425-US$1435/mt FOB Belawan Surabaya for July shipments, while STR 20 offers were around US$1450/mt on FOB basis. In addition, the upswing in the US dollar also impacted the buying capacity. Even though it did bring in some breather for the producers, the bearish trend in the physical prices nullified high-profit booking chances. 

Rumors of the Chinese government buying rubber 

Meanwhile, unconfirmed rumors about the Chinese government buying new rubber made rounds in the market. However, it failed to impact the overall sentiment. According to Helixtap market sources, the rumors are unconfirmed at this moment. "SHFE and INE are diverging. WF grade price is resilient due to less-than-optimal tapping in Yunnan, whereas China is flushed with imported TSRs," said a Singapore-based source. 

As per industry sources, the Chinese government is looking to replace its existing stockpile with new stocks. The rumored quantity is around 100,000 mt, which will introduce uncertainty and affect prices according to the market sources.

Spot slows on reports fresh waves of Covid in China 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, steady

The spot rubber rally came to a halt during the day as there was apprehension amid the market participants given the reports of rising Covid cases in China and upcoming US inflation data. As a result, the Asian rubber producers adjusted their offers downward to match the buying expectations.

SIR 20 traded level was around US$1435-US$1440/mt FOB Belawan Surabaya for July and August shipments. Even Thai producers lowered their offers. There was slight bearish sentiment in the market amid some drop in the traded volume. 

However, with no reports of any restrictions implemented, the market expects the second wave to slow down trading efficiency. In addition, there is a lot of anticipation amid the market participants around the US inflation data due later today as it would impact the Fed’s next interest rate decision. 

Meanwhile, on the raw material front, Indonesia continued to see some shortages. According to Helixtap market intelligence, there is some shortage of African and Malaysian cup lumps as well. While some market sources noted earlier this week that there are ample offers for African TSR in the market. The shortage might dry up the supply of raw material, at least in the short term, as Africa would enter the new season soon.

Mixed trend in spot prices, hints of over supply for African rubber

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1445/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, steady

The spot rubber market was mixed during the day as the Indonesian and Thai rubber continued moving north; African rubber is seeing some glut. Meanwhile, bearish global cues kept the market skeptical of the strength in the Asian rubber prices. 

Higher Indo raw material supports SIR prices

Indonesian rubber prices continued to inch up amid rising raw material prices. According to Helixtap market sources, there is some shortage of raw materials, which is trickling into higher SIR prices. As a result, there was a jump in the Indonesian traded level at US$1445/mt FOB Belawan Surabaya for July shipments. In addition, some buying interest from some major tire makers kept the prices buoyant.

“Yes, raw material is an issue for some (producers/processors). They also cannot sell at US$1450-US$1460/mt on FOB basis,” said a Singapore-based source. 

The pre-election uptick in Thailand

Meanwhile, Thai producers continued to hold on to their offers despite bearish demand from China ahead of the elections. A similar trend was seen before the 2019 elections as well as the prices peaked during the month of the election but saw a massive correction after. With Thailand all set to enter the new season and the current bearishness in demand continuing, STR 20 might likely see similar movement in the prices post-2023 general elections.

Supply glut for African rubber

The African rubber prices, however, are under pressure amid talks of oversupply in the market. According to Helixtap market sources, there is some uptick in European buying, but they opted for African rubber as they are the most economical option. “There is so much African rubber in the market that Europe is well covered,” said another Singapore-based source. There are ample offers in the market for AFR 10 ranging from US$1350-US$1400/my CIF EU main ports. Meanwhile, market sources noted that stocks in China for African rubber are also high at around US$1275/mt.

Strong opening for spot weak USD brings some buying back

Helixtap Daily Physical Prices Assessment

• 
  Helixtap assessed SIR20 US$1442.5/mt FOB Belawan Surabaya, up US$22.5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, up US$20
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, up US$10

Spot rubber prices saw a strong opening of the week as the weak US dollar brought some buying back, while producers might see some pinch on the margins amid rising factory costs. 

Some weakness in the dollar during the day probed some buying back into the market, leading to some uptick in the prices. Even though the offers for prompt months were still on the lower level, July and August offers saw some uptick across the board. 

There was a significant jump in the Indonesian traded level at US$144-US$1445/mt FOB Belawan Surabaya for July shipments. But lower June offers from dealers capped the uptick in the prices. The hike in Indonesian prices resulted in a narrowing of the Indo-Thai spread to (-) US$2.5 from (-) US$12.5 on May 2, 2023. 

While the hike would offset some of the pressure on the margins, the weakness in the US dollar would impact both factory costs and raw material prices, which have been northbound lately. "Weak USD means higher export prices, and that's an added dampener," said a trader source. 

Meanwhile, on the macro front, the market participants are awaiting the US inflation data this week, which would set the tone for the outlook for US monetary policy.

It would also be interesting to see how much demand churns from China this week, especially amid a 21% rise in SHFE TSR stock level last week compared to the week ending April 7.  According to industry reports, Chinese tire companies' vast production capacity mainly relies on overseas demand as the domestic demand is largely muted.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Spot correction continues, EU demand slowly returning

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1325/mt FOB Ho chi minh, down US$ 40
• Helixtap assessed SMR20 US$1380/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1355/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.5/kg ex-works, down 1 THB
• Helixtap assessed Bulk latex US$1065/mt FOB Bangkok Laem Chabang, up US$ 20

Spot prices saw correction all across the board during the week amid continued bearish global economic cues. However, some buyers were in the market, but with ample offers, the pricing competition intensified. 

Global cues bearish, market jittery 

The market participants were cautious after China posted a dip in factory activities. As a result, the demand from China has been extremely sluggish, and there is hardly any active buying interest during the day. Meanwhile, according to Helixtap market sources, ample offers in the market further weighed on the physical prices. 

There is ample stock at the Chinese warehouses, slowing down the interest in overseas cargoes. Moreover, the local stock cargoes were still cheaper than overseas cargoes. Chinese bonded warehouse cargoes were offered around US$1275/mt, AFR 10 was around 1280/mt on CIF basis, and STR mixture was around US$1370/mt. "Factory activities contraction, stock inventory rising, hardly any positive," said a Singapore-based source.

Meanwhile, European Central Bank raised rates signaling the need for more tightening following the U.S. Federal Reserve hikes. Even though the move was expected, it made the market participants nervous about the economy's outlook. 

Slight improvement in European buying 

There was a slight improvement in European buying. However, the market sources noted that the buyers are cautious, and the demand has increased to an extent. The current buying interest is mainly concentrated on African rubber, given its proximity and the most economical option. 

As of April 5, 2023, the gap between Indo-African rubber is around US$120/mt on FOB basis, and the Thai-African rubber gap is around US$125/mt. This kind of gap opens the arbitrage window into the Asian market as well. 

Meanwhile, despite most of the markets being just out of winter, there are ample offers in the market. Moreover, with the correction in Thai and African raw material prices, the producers of these origins would be better positioned to adjust to the market level.

Indonesian producers, meanwhile, might find it difficult to maintain their popularity amid rising raw material prices. In addition, the appreciation of the Indonesian Rupiah against the U.S. dollar would add more pressure on the margins, which are already negative.

Indo spot northbound while demand still muted

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, up US$10
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1345/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1305/mt FOB Abidjan, down US$5

Indonesian spot rubber prices firmed up during the Asian trade day amid some uptick in raw material prices. Meanwhile, demand was largely muted despite the reopening of all the markets after the Labour Day holidays.

Indonesian rubber surge on higher raw material prices 

There was a slight uptick in Indonesian physical rubber prices. While Indonesian rubber has been the lowest denominator in the premium grade rubber, some uptick in the raw material prices since the beginning of the Ramadan month has been nudging the prices up.

Despite bearish demand, the traded level for SIR 20 during the day marginally improved to US$1425/mt on FOB basis for July shipments. According to Helixtap market sources, higher raw material contributed to the improvement in the prices as there is no support from the demand side yet. 

“Many buyers are side-lined today,” said a Singapore-based source. The possible reason for the stay away would be to assess the exact market situation. Even though the expectation for the week is a sideways movement in the prices, Indonesian rubber did not fit into the bill.

Sources noted a lack of raw materials in the market, which is nudging both cup lumps and processed rubber prices. While this could be the result of the slow return of the farmers post Hari Raya, it could also be the result of the shutdowns over the last year owing to consistent negative margins.

This, however, is resulting in a narrowing gap between Thai and Indo rubber. As most of the Thai sellers opted to hold on to their offers, the gap between SIR and STR narrowed to -US$10/mt during the day. 

The situation could possibly open the arbitrage window for the larger Indonesian producers to import African raw materials to stay competitive. Moreover, amid bearish demand from Europe, the US, and even China, coupled with some over-supply in the market, African physical prices are under pressure. Thus, in the coming weeks, the market might again see some spike in the inflow of African raw materials into Indonesia. 

Macro indicators not promising

Meanwhile, the expected Fed rate hikes failed to stir much reaction in the market. However, rising concerns about inflation and the upcoming possibility of another hike by the ECB kept the buyers jittery. Making the situation gloomier was the dip in Chinese factory activities. Post a rally in exports in March, there was an expectation of the slowdown in April as most of these orders were part of the backlog. 

In addition, domestic demand remained sluggish, with limited hope for exports as the Western market still struggled with economic turmoil. These factors will likely impact both demand and sentiment for rubber in the coming weeks.

Spot slides amid limited buying 

Helixtap Daily Physical Prices Assessment

• 
  Helixtap assessed SIR20 US$1415/mt FOB Belawan Surabaya, down US$7.5
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1350/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1310/mt FOB Abidjan, down US$15

With holidays in China and Japan, the market activities were largely sluggish, weighing on the spot prices during the Asian trade day. The market participants await clarity after China returns.

China has been sluggish for the past week due to the higher stock level. SHFE TSR stock rose 35% over April, indicating sluggish domestic demand and a slowing export market. Even though before the holidays, there was some active buying from some of the tire majors. However, amid the expectations of rate hikes by the ECB and Fed, the buyers are cautious.

Meanwhile, the spot prices saw some correction. The traded level for SIR 20 was US$1415/mt on FOB basis for July shipments, with buying interest at around US$1410/mt. Thai producers were also seen adjusting their offers lower. However, the gap between Indo-Thai prices continued to widen to (-) US$15/mt. 

On the other hand, appreciation in the Asian currencies against the US dollar is weighing on the producer’s margins. Some market participants feel the pressure on the prices would possibly ease once the buyers return tomorrow. There has been some uptick in the raw material prices in Thailand before the election and reports of extended wintering. Meanwhile, in Indonesia, too, farmgate prices saw some uptick. This is likely to open the arbitrage for African raw material into Indonesia again as Africa is towards the end of the wintering.

Slow opening for spot with China on holiday

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1422.5/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$15
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$15

The sluggish note in the spot market continued amid the limited buying interest and with China and Japan on holiday. While the producers tried to hold on to the offers, the market participants waited for more clarity once China came back.

"The market is very quiet currently, especially with China shut," said a producer source. As a result, the activities were largely muted. However, owing to the northward bias in the raw material prices, the producers opted to hold on to their prices. The traded level for SIR 20 was US$1420- US$1425/mt on FOB basis for July shipments, largely rangebound.

The STR 20 offers were also at similar levels as last week, as per Helixtap's market intelligence. However, some sources noted that the Thai prices were "firmish" during the day ahead of the elections. However, amid sluggish European demand and holidays in China, African rubber prices were under pressure. In addition, some prompt offers in the market also indicated that some producers could be willing to liquidate stock, further adding to the downward bias on the African prices. 

Meanwhile, IMF raised Asia's economic forecast on banking on China's recovery. However, inflationary pressure and concerns of the economy tipping into a recession would impact the sentiment, especially for Western countries. ECB is expected to raise rates, and Fed will likely follow suit. As a result, prices and demand will stay volatile in the coming weeks.

Price Signals:

MA (moving average)

SIR20: 50MA moving closer to the 200MA, after 20MA crossed 200MA in late April. This suggests likely upward price pressure for SIR20 in the near term.

STR20: Such an upward price pressure is even clearer for STR20 as both 20MA and 50MA crossed 200MA in late April. The last time both 20MA and 50MA were above 200MA was in April last year. Then prices were above USD$1,800/t.

SICOM TSR20: Unlike physical rubber prices, SICOM TSR20 is still some way off 200MA but 20MA has crossed over 50MA slightly, suggesting upward price pressure in the short term.

Differentials:

SIR20 vs SICOM TSR20 P2 (second month out) : Differential above $50/t since early April, reaching a high last week before coming downward slightly to around $74/t last week. Such a figure is quite high for the month of April.

STR20 vs SICOM TSR 20 P2 (second month out): Similar trends are observed for Thai differential as well but the Thai differential is more volatile, moving up and down in consecutive days more often than the Indonesian differential. The Thai differential was also higher at around $86/t last week, higher than most of April.
 

The summary from our predictive forecasting this week:
 

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.
 

Indo prices hold on despite bear market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1295/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1290/mt CIF China, down US$ 10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.75/kg ex-works, up THB 0.5
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 10

There was a slight uptick in Indonesian prices during the Asian trade day, while Thai and African prices held steady. The demand, meanwhile, remained fragile with volatile foreign exchange, which kept the producers' margins under immense pressure. 

The week has been hard for the producers with withering demand and continued absence from China. While some sporadic buying from some tire majors capped the Indonesian prices from a free fall, the situation was different for Thai and African rubber.

 While SIR traded at a slightly higher US$1425/mt on FOB basis, STR offers were around US$1400-US$1420/mt level. African producers held on to their offers during the day as they have seen a significant correction over the week. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and fluctuation in the US dollar is limiting the buying capacity.

Raw material situation dicey 

While Africa is back in full swing, the situation in Indonesia and Thai is still tight. There have been reports of shortfalls in Indonesia, and Thailand has also seen some unseasonal heavy rains. 

"It has been raining. The weather forecast is heavy rainfall from tomorrow in most parts of Thailand until next Thursday. Hopefully, that should temporarily cool down the hot weather,' said a producer source. While the supply of raw materials remained tight in Thailand, they expect to go through a dry spell from June-July, the El Niño effect. 

This, amid a bear market, is weighing heavily upon the margins. As per Helixtap's market intelligence, it's challenging to break even at the current price level and demand situation

Tussle between Indo- African rubber intensifies

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1432.5/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, steady
• Helixtap assessed SMR20 US$1360/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1300/mt CIF China, down US$ 20

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, steady
• Helixtap assessed Bulk latex US$1040/mt FOB Bangkok Laem Chabang, down US$ 10

Massive correction in the African rubber has put the Indonesian rubber producers in a spot as they tried to adjust their prices to stay competitive. Meanwhile, Thai producers also revised their prices downward to make their way into the international market, especially amid consistent Chinese absence. 

Indo-AFR tussle intensifies 

Indonesian producers were seen adjusting their prices slightly downward during the day amid rising competition from African rubber. According to Helixtap market sources, the Indonesian producers are fighting the African rubber offers now, which are below the US$1300/mt level.

*AFR is implied FOB price

With a major tire maker's return in the market, the pressure on Indonesian producers has intensified. In addition, with Africa now out of wintering, the market is flooded with offers. "Africa is coming out of wintering now, so the offers will get aggressive," said a market source. 

Earlier in the year, the Helixtap AFR 10 (FOB implied) prices were trading at a premium of US$30 to Helixtap SIR 20, which has reversed, and as of May 19, Helixtap AFR 10 (FOB implied) is trading at a discount of US$127.50. 

Some of the African producers are desperate to sell, while the bigger producers can manage the impact. Some small to mid-sized producers are already in the negative margin. Meanwhile, in Indonesia, most of the producers are struggling with negative margins. The current situation will weigh heavily on the physical prices, pushing them south. 

Thailand enters the competition 

Meanwhile, some Thai producers were seen adjusting their offers downward to match the buying expectations. On the other hand, Thailand is seeing some shortage in raw materials. "Market has been dull as before, hardly any trade. Yes indeed, the weather remains very hot and the supply tight," said a producer source. 

Some producers' stance has confused the market participants as they noted that "there are some very aggressive Thai offers in the market." However, according to Helixtap market sources, raw material is short in South Thailand due to rains.

Spot mixed around uncertainty on outlook

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1327.5/mt CFR Hamburg Rotterdam, down US$2.5
• Helixtap implied AFR10 US$1287.5/mt FOB Abidjan, down US$2.5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1370/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1320/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment
 

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 15

The spot market remained mixed during the day as the buying was largely muted amid the upswing in the US dollar. In addition, bearish macro cues further sent the market into jitters leading to some skepticism among the market participants.

Renewed economic concerns in the US and tepid Chinese economic data have revived anxieties about demand. The biggest concern is the market is uncertain over whether the current bearishness would sustain or is a temporary economic slowdown. 

SIR 20 traded level further corrected to around US$1430/mt FOB Belawan Surabaya for August shipments, while STR 20 offers were around US$1450/mt on FOB basis. As of April 12, 2023, the gap between Indo-African rubber is around US$142.5/mt on FOB basis, and the Indo-Thai rubber gap is around US$147.5/mt. While the gap between the regions narrowed from last week while the arbitrage window into the Asian market is still there. However, bearish demand is unlikely to increase the inflow of African rubber into the region. 

Meanwhile, the rumor about China restocking is gathering steam. However, some market sources believe that the rumor was a strategy to quell the shorts in the market. The news failed to impact the overall sentiment as ample offers were floating in the market. 

On the raw material front, Indonesian raw material prices continued to hold amid reports of some shortages. A similar situation was reported for Thailand and Africa. “Yes, the season is delayed; there is a shortage of raw material,” said a trader source. However, with both regions coming out of wintering, the situation would ease, likely adding to the pressure on the prices.

Spot correction continues, EU demand slowly returning

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1325/mt FOB Ho chi minh, down US$ 40
• Helixtap assessed SMR20 US$1380/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1355/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.5/kg ex-works, down 1 THB
• Helixtap assessed Bulk latex US$1065/mt FOB Bangkok Laem Chabang, up US$ 20

Spot prices saw correction all across the board during the week amid continued bearish global economic cues. However, some buyers were in the market, but with ample offers, the pricing competition intensified. 

Global cues bearish, market jittery 

The market participants were cautious after China posted a dip in factory activities. As a result, the demand from China has been extremely sluggish, and there is hardly any active buying interest during the day. Meanwhile, according to Helixtap market sources, ample offers in the market further weighed on the physical prices. 

There is ample stock at the Chinese warehouses, slowing down the interest in overseas cargoes. Moreover, the local stock cargoes were still cheaper than overseas cargoes. Chinese bonded warehouse cargoes were offered around US$1275/mt, AFR 10 was around 1280/mt on CIF basis, and STR mixture was around US$1370/mt. "Factory activities contraction, stock inventory rising, hardly any positive," said a Singapore-based source.

Meanwhile, European Central Bank raised rates signaling the need for more tightening following the U.S. Federal Reserve hikes. Even though the move was expected, it made the market participants nervous about the economy's outlook. 

Slight improvement in European buying 

There was a slight improvement in European buying. However, the market sources noted that the buyers are cautious, and the demand has increased to an extent. The current buying interest is mainly concentrated on African rubber, given its proximity and the most economical option. 

As of April 5, 2023, the gap between Indo-African rubber is around US$120/mt on FOB basis, and the Thai-African rubber gap is around US$125/mt. This kind of gap opens the arbitrage window into the Asian market as well. 

Meanwhile, despite most of the markets being just out of winter, there are ample offers in the market. Moreover, with the correction in Thai and African raw material prices, the producers of these origins would be better positioned to adjust to the market level.

Indonesian producers, meanwhile, might find it difficult to maintain their popularity amid rising raw material prices. In addition, the appreciation of the Indonesian Rupiah against the U.S. dollar would add more pressure on the margins, which are already negative.

Indo prices hold on despite bear market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1425/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1400/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1295/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1290/mt CIF China, down US$ 10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.75/kg ex-works, up THB 0.5
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 10

There was a slight uptick in Indonesian prices during the Asian trade day, while Thai and African prices held steady. The demand, meanwhile, remained fragile with volatile foreign exchange, which kept the producers' margins under immense pressure. 

The week has been hard for the producers with withering demand and continued absence from China. While some sporadic buying from some tire majors capped the Indonesian prices from a free fall, the situation was different for Thai and African rubber.

 While SIR traded at a slightly higher US$1425/mt on FOB basis, STR offers were around US$1400-US$1420/mt level. African producers held on to their offers during the day as they have seen a significant correction over the week. 

With some of the major buyers sidelined to access the market, there was a caution to book in a correcting market. The market has been slow this week, and fluctuation in the US dollar is limiting the buying capacity.

Raw material situation dicey 

While Africa is back in full swing, the situation in Indonesia and Thai is still tight. There have been reports of shortfalls in Indonesia, and Thailand has also seen some unseasonal heavy rains. 

"It has been raining. The weather forecast is heavy rainfall from tomorrow in most parts of Thailand until next Thursday. Hopefully, that should temporarily cool down the hot weather,' said a producer source. While the supply of raw materials remained tight in Thailand, they expect to go through a dry spell from June-July, the El Niño effect. 

This, amid a bear market, is weighing heavily upon the margins. As per Helixtap's market intelligence, it's challenging to break even at the current price level and demand situation

Tussle between Indo- African rubber intensifies

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1437.5/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1432.5/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1310/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1270/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, steady
• Helixtap assessed SMR20 US$1360/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1300/mt CIF China, down US$ 20

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,800/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, steady
• Helixtap assessed Bulk latex US$1040/mt FOB Bangkok Laem Chabang, down US$ 10

Massive correction in the African rubber has put the Indonesian rubber producers in a spot as they tried to adjust their prices to stay competitive. Meanwhile, Thai producers also revised their prices downward to make their way into the international market, especially amid consistent Chinese absence. 

Indo-AFR tussle intensifies 

Indonesian producers were seen adjusting their prices slightly downward during the day amid rising competition from African rubber. According to Helixtap market sources, the Indonesian producers are fighting the African rubber offers now, which are below the US$1300/mt level.

*AFR is implied FOB price

With a major tire maker's return in the market, the pressure on Indonesian producers has intensified. In addition, with Africa now out of wintering, the market is flooded with offers. "Africa is coming out of wintering now, so the offers will get aggressive," said a market source. 

Earlier in the year, the Helixtap AFR 10 (FOB implied) prices were trading at a premium of US$30 to Helixtap SIR 20, which has reversed, and as of May 19, Helixtap AFR 10 (FOB implied) is trading at a discount of US$127.50. 

Some of the African producers are desperate to sell, while the bigger producers can manage the impact. Some small to mid-sized producers are already in the negative margin. Meanwhile, in Indonesia, most of the producers are struggling with negative margins. The current situation will weigh heavily on the physical prices, pushing them south. 

Thailand enters the competition 

Meanwhile, some Thai producers were seen adjusting their offers downward to match the buying expectations. On the other hand, Thailand is seeing some shortage in raw materials. "Market has been dull as before, hardly any trade. Yes indeed, the weather remains very hot and the supply tight," said a producer source. 

Some producers' stance has confused the market participants as they noted that "there are some very aggressive Thai offers in the market." However, according to Helixtap market sources, raw material is short in South Thailand due to rains.

Spot mixed around uncertainty on outlook

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$2.5
• Helixtap assessed STR20 US$1435/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1327.5/mt CFR Hamburg Rotterdam, down US$2.5
• Helixtap implied AFR10 US$1287.5/mt FOB Abidjan, down US$2.5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1310/mt FOB Ho chi minh, down US$ 15
• Helixtap assessed SMR20 US$1370/mt FOB Klang Penang, down US$ 10
• Helixtap assessed TSR 20 US$1320/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment
 

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, steady
• Helixtap assessed Thai raw material THB 40.25/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1050/mt FOB Bangkok Laem Chabang, up US$ 15

The spot market remained mixed during the day as the buying was largely muted amid the upswing in the US dollar. In addition, bearish macro cues further sent the market into jitters leading to some skepticism among the market participants.

Renewed economic concerns in the US and tepid Chinese economic data have revived anxieties about demand. The biggest concern is the market is uncertain over whether the current bearishness would sustain or is a temporary economic slowdown. 

SIR 20 traded level further corrected to around US$1430/mt FOB Belawan Surabaya for August shipments, while STR 20 offers were around US$1450/mt on FOB basis. As of April 12, 2023, the gap between Indo-African rubber is around US$142.5/mt on FOB basis, and the Indo-Thai rubber gap is around US$147.5/mt. While the gap between the regions narrowed from last week while the arbitrage window into the Asian market is still there. However, bearish demand is unlikely to increase the inflow of African rubber into the region. 

Meanwhile, the rumor about China restocking is gathering steam. However, some market sources believe that the rumor was a strategy to quell the shorts in the market. The news failed to impact the overall sentiment as ample offers were floating in the market. 

On the raw material front, Indonesian raw material prices continued to hold amid reports of some shortages. A similar situation was reported for Thailand and Africa. “Yes, the season is delayed; there is a shortage of raw material,” said a trader source. However, with both regions coming out of wintering, the situation would ease, likely adding to the pressure on the prices.

Spot correction continues, EU demand slowly returning

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1425/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1340/mt CFR Hamburg Rotterdam, down US$5
• Helixtap implied AFR10 US$1300/mt FOB Abidjan, down US$5

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1325/mt FOB Ho chi minh, down US$ 40
• Helixtap assessed SMR20 US$1380/mt FOB Klang Penang, down US$ 20
• Helixtap assessed TSR 20 US$1355/mt CIF China, down US$ 35 

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,600/kg ex-works, up IDR 200
• Helixtap assessed Thai raw material THB 40.5/kg ex-works, down 1 THB
• Helixtap assessed Bulk latex US$1065/mt FOB Bangkok Laem Chabang, up US$ 20

Spot prices saw correction all across the board during the week amid continued bearish global economic cues. However, some buyers were in the market, but with ample offers, the pricing competition intensified. 

Global cues bearish, market jittery 

The market participants were cautious after China posted a dip in factory activities. As a result, the demand from China has been extremely sluggish, and there is hardly any active buying interest during the day. Meanwhile, according to Helixtap market sources, ample offers in the market further weighed on the physical prices. 

There is ample stock at the Chinese warehouses, slowing down the interest in overseas cargoes. Moreover, the local stock cargoes were still cheaper than overseas cargoes. Chinese bonded warehouse cargoes were offered around US$1275/mt, AFR 10 was around 1280/mt on CIF basis, and STR mixture was around US$1370/mt. "Factory activities contraction, stock inventory rising, hardly any positive," said a Singapore-based source.

Meanwhile, European Central Bank raised rates signaling the need for more tightening following the U.S. Federal Reserve hikes. Even though the move was expected, it made the market participants nervous about the economy's outlook. 

Slight improvement in European buying 

There was a slight improvement in European buying. However, the market sources noted that the buyers are cautious, and the demand has increased to an extent. The current buying interest is mainly concentrated on African rubber, given its proximity and the most economical option. 

As of April 5, 2023, the gap between Indo-African rubber is around US$120/mt on FOB basis, and the Thai-African rubber gap is around US$125/mt. This kind of gap opens the arbitrage window into the Asian market as well. 

Meanwhile, despite most of the markets being just out of winter, there are ample offers in the market. Moreover, with the correction in Thai and African raw material prices, the producers of these origins would be better positioned to adjust to the market level.

Indonesian producers, meanwhile, might find it difficult to maintain their popularity amid rising raw material prices. In addition, the appreciation of the Indonesian Rupiah against the U.S. dollar would add more pressure on the margins, which are already negative.