Expectations that China, where demand is often cited as a bullish market factor, could enter the market may boost sentiment for Indonesia's rubber prices. Unusually dry weather in Thailand, the world's top producer and exporter had kept supplies tight and boosted prices up to $1.23 a kg this week.
"Supply conditions in the region will keep prices supported. And China has recently bought 500 tonnes for immediate shipment at $1.205 a kilogram from Surabaya," one Padding trader said referring to the provincial capital of East Java.
However, some traders were less optimistic, saying prices would stay flat this week as high prices would keep Chinese buyers away until after the holidays. "I think prices will stay in the same level.
They're hesitant to buy more to avoid further gains, they'll come back eventually," said one Jakarta trader. Traders said rubber deliveries have returned to normal in northern Sumatra's growing belt due to recent rains and floods.
Natural rubber output in 2005 is expected to increase modestly from an estimated 1.87 million tonnes in 2004.