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Baht/$ 34.24/29 (Bid/Ask)
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COMMODITIES
PHUSADEE ARUNMAS
The Thai rubber industry is on alert for possible defaults on shipments by buyers because of sharply falling prices, according to traders.
"The falling prices are too much," admitted Luckchai Kittipol, president of the Thai Rubber Association.
Dealers and industry officials said yesterday that the delivery of at least 5,000 tonnes of Thai rubber to China had been delayed and buyers could default on shipments negotiated when prices of the commodity were much higher.
"Buyers asked for a default, but we are negotiating for a better solution," a Singapore-based dealer told Reuters.
Physical rubber prices were around $2,000 per tonne on Monday, more than 30% below this year's high. Falling auto sales and fears of falling demand dragged rubber futures down on the Tokyo Commodity Exchange (Tocom) on Friday to the lowest in nearly two years.
Physical rubber prices in Southeast Asia, which rose to their highest level since 1952 in June above $3.0 per kilogramme, fell sharply in line with the Tocom to $2.00 yesterday, traders said.
However, Mr Luckchai said traders in Thailand, the world's biggest rubber exporter, had yet to see any shipments to China delayed or defaulted.
"Reports of shipment defaults by Chinese buyers may be a ploy to press the prices down further," said Mr Luckchai. "We're checking the information."
Prices of a raw material for export-grade rubber sheet, USS3, are expected to fall further this month and next due to rising supply, traders said. Seasonal rains in southern Thailand, the country's key rubber growing area, have stopped, allowing farmers to tap more rubber.
"USS prices may fall below 50 baht per kilogramme" said a trader based in southern Thailand. Prices were quoted at 64 baht per kg yesterday, down from this year's high above 101 baht in June.
Falling rubber prices have also prompted the International Rubber Consortium (IRCo) to call a meeting in Bangkok for tomorrow and Thursday to support rubber prices by reducing supply.
IRCo, established by major producers Thailand, Indonesia and Malaysia to stabilise world rubber prices, is expected to come up with measures to encourage farmers to reduce rubber production.
The three countries, which account for over 70% of global output, last worked together in the early 2000s to help prices recover from 30-year lows.
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