[Kabar-indonesia] 16 RI Biz/Econ Reports: Boediono: Rates Will Fall; Telkom; Mandiri [+JSX/Rupiah]

[JoyoNews at aol.com]

Note: also see the previously sent: Indonesia Firms 
Want Sharp Lending Rate Cuts - Central Bank [+JP]

16 Reports:

- Indonesia Econ Min Expects Rates 
  To Continue To Fall
- WSJ: China's Central Bank Moves 
  to Cool Economy [PBOC Raises 
  Bank-Reserve Requirements, Allows 
  Yuan to Trade Higher]
- Indonesian banks begin to lower 
  interest rates
- Investing in Indonesia is more costly 
  than in neighbours: Exec.
- Indonesia Shares End Flat; Agri 
  Stock Gains Vs Pft-Taking
- Indonesia Rupiah Ends Up As Dlr 
  Falls Vs Asian Currencies
- Eurocham to open two branch offices 
  outside Jakarta
- Indonesia needs 10 new medium 
  wheat flour factories
- Indonesia's Bank Mandiri revises 
  down net profit target
- Indonesia's Telkom to hire Russian 
  satellite
- Broker call - Indonesia's Bakrie Brothers 
  maintained a 'buy' - Danareksa
- Stockwatch - Indonesia's Sumalindo 
  sharply higher on rumor new investor 
  coming in
- Malaysia's Astro to increase investment 
  in Indonesia
- Malaysia Plantations Risk Losing 
  Licenses By Open Burning
- Indonesia palm oil market slow, 
  players eye prices
- Asia Rubber-TOCOM rallies almost 
  2 pct but outlook bearish

Indonesia Econ Min Expects Rates To Continue To Fall

JAKARTA, July 21 (Dow Jones)--Indonesia's Coordinating Minister for
the Economy Boediono said Friday that he expects interest rates here
will continue to fall as the inflation outlook is "improving."

"The current (Bank Indonesia one-month benchmark rate) is still high,"
Boediono told reporters. "I hope - not dictate to Bank Indonesia -
that the rate can be cut in line with improving inflation."

Bank Indonesia earlier this month cut its benchmark rate by 25 basis
points to 12.25% amid easing inflation. It marked the second rate cut
this year, following a tightening cycle that began in July 2005.

Indonesia's price index rose 15.53% on year in June, compared with
15.60% in May.

------------------------------------------

The Wall Street Journal
July 21, 2006

China's Central Bank 
Moves to Cool Economy

PBOC Raises Bank-Reserve Requirements, 
Allows Yuan to Trade Higher

By ANDREW BROWNE

BEIJING - Just days after China announced sharply accelerated economic growth 
in the second quarter, its central bank moved swiftly to head off 
overheating, sucking money out of the banking system and allowing the yuan to trade 
higher against the dollar.

The People's Bank of China said Friday it would require commercial banks to 
place more of their deposits with the central bank, meaning that banks will 
have less money to lend out for investment. It was the second time in five weeks 
that the central bank has raised the so-called reserve requirement.

At the same time, the Chinese yuan on Friday hit its highest level against 
the dollar since its one-off appreciation of 2.1% exactly one year ago. And 
Beijing took another step forward on a scheme to allow Chinese banks to invest 
capital outside the country, part of a strategy to help reverse a huge inflow of 
money that threatens the Chinese economy with overheating.

Earlier in the week, China announced its economy in the second quarter of 
this year expanded by 11.3% from a year earlier, accelerating from 10.3% in the 
first quarter and raising growth to its fastest level in more than a decade. 
Growth is surging as the economy is flooded with money from record trade 
surpluses. The cash ends up being lent out by banks, fuelling an investment binge 
that could lead to a crash if it ends up resulting in overcapacity, falling 
profits and bankruptcies.

Economists say the combined moves Friday suggest that the central bank 
intends to move decisively, and deploy the full range of tools at its disposal, to 
bring runaway investment under control. Allowing the yuan to appreciate makes 
Chinese exports more expensive in dollar terms, and encourages imports.

Friday's moves are "a good signal," said Frank Gong, China economist for JP 
Morgan in Hong Kong. He said financial authorities "are moving a little bit on 
all fronts."

The reserve requirements will rise by 0.5 percentage point to 8.5% of total 
deposits for big state banks and joint-stock banks, and to 9% for smaller 
banks, including urban credit cooperatives, the central bank said in a statement. 
The change will take effect August 15.

In June, the central bank raised reserve requirements by the same margin. 
That followed a 0.27 percentage point increase in bank lending rates in April to 
5.85% from 5.58%.

The yuan gained against the dollar in trading between Chinese and foreign 
banks on an over-the-counter market that kicks in after an electronic market 
closes for the day. At one point it rose to 7.9815 compared with Thursday's close 
of 7.9920.

In theory, the yuan can move by any margin on the over-the-counter market, 
but in practice the central bank controls the exchange rate by buying or selling 
currency through big Chinese state banks, including the Bank of China. Some 
traders saw Friday's movement as a sign that the central bank intends to pick 
up the pace of currency appreciation.

Since its 2.1% appreciation on July 21 last year, the yuan has advanced by 
only another 1.4%, frustrating the U.S. and China's other major trading 
partners, which say an undervalued yuan makes Chinese exports unfairly cheap.

Qing Wang, Greater China economist with Bank of America, said in a research 
note he believes Beijing "will give a more prominent role" to faster currency 
appreciation.

Also on Friday, the State Administration of Foreign Exchange said China had 
granted its first batch of foreign-exchange quotas to three banks to enable 
investment in overseas capital markets. Bank of China is allowed to exchange yuan 
funds into as much as $2.5 billion worth of foreign currency to buy 
securities overseas. Industrial & Commercial Bank of China received a quota of $2 
billion and Bank of East Asia $300 million. The statement didn't say when the three 
approved banks would start their overseas investment.

----------------------------------------

Indonesian banks begin to lower interest rates

JAKARTA, July 21 (Asia Pulse/Antara) - Domestic banks have begun to
cut interest on rupiah-denominated time deposits after the Deposit
Insurance Agency (LPS) lowered its lending interest by 50 basis points
to 12 per cent, a banker said.

"The drop in the lending interest rate has prompted banks to lower
interest on rupiah-denominated time deposits but it will still takes
time for the lending interest rate to go down," head of the
international banking group of PT Bank Haga, Yenny Santosa said on
Thursday.

She said the high lending interest rate had made it difficult for
banks to channel credits to customers.

"Banks do not like high interest rates because it impedes the
channeling of credits to customers and consequently, their
intermediary funtion will not grow," she said.

She said Bank Haga itself had lowered its interest on
rupiah-denominated time deposits for one month and three months to 11
per cent from 15 per cent and for six months and 12 months to 10 per
cent from 11 per cent.

Interest on dollar-denominated time deposits remained at 3.5 per cent, 
she said.

Asked why the drop in interest on time deposits exceeded the decline
in lending interest, she said this was part of the banks' anticipatory
measures amid growing signs that bank interest rates would drop again.

The cut was also the result of increasingly weak inflationary
pressures that would likely prompt Bank Indonesia (the central
bank/BI) to further cut its key interest rate or BI Rate, she said.

The recent 25 basis point drop in the BI Rate still could not
encourage domestic banks to lower lending interest, she said.

Meanwhile, deputy manager of Bank Central Asia (BCA) Evoni Barlianto
said the bank had also lowered interest on rupiah-denominated time
deposits for one month to 12 months to 9.5 per cent for depositors
whose savings are less than Rp1 billion.

The interest on rupiah-denominated time deposits which exceed Rp1
billion up to Rp5 billion for one month to three months was 11 per
cent and for six months up to 12 months 10.25 per cent, he said.

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Investing in Indonesia is more costly than in neighbours: Exec.

JAKARTA, July 21 (Asia Pulse/Antara) - Investing in the shoe industry
in Indonesia is more costly than in any other Southeast Asian country
so the government needs to restructure and simplify its investment
licensing system, an industry spokekmn said.

"Indonesia needs to simplify its bureaucratic investment licensing
system because the obtainment of lincenses under the present system
has an enormous impact on production cost," Eddy Widjanarko, chairman
of the Indonesian Shoe Industries Association (Apresindo) said.

He said investment cost per meter for a shoemaking industry in
Indonesia reached Rp50 million while in Malaysia the figure was only
Rp18 million, Singapore Rp11 million, China and Vietnam about Rp25
million.

"The low cost in neighbouring countries is due to the fact that those
countries apply a one-stop service system in issuing investment
licenses," he told a press conference held in the run up to the
holding of an Indo Leather & Footwear 2006 exhibition.

He said Indonesia would not be able to attract any investor if
investment costs in the country remained high.

Eddy said a company had to spend some Rp22 million to obtain a
recommendation from a district head. "These costs are used for
meetings, issuance of site permits, site plan and surveyor officials.

"In order to obtain licenses for construction of buildinga,
restribution, business license and others, an investor has to spend
some Rp30 million more ," he added.

In the meantime, Industry Minister Fahmi Idris said last week the
government had improved and expanded incentives for various industries
in certain regions through an amendment to Government Regulation
No.148/2000.

Coordinating Minister for Economic Affairs Boediono would formalize
the amendment on Friday (July 14), Fahmi said, adding that the amended
government regulation would provide for income tax facilities for
investment in certain industries in certain regions.

Fahmi said the alterations to the regulation affected the types of
industries, the regions where the regulation would apply and its
objectives.

"The essence is to give incentives to industries including
amortization," Fahmi said.

------------------------------------------

Indonesia Shares End Flat; Agri Stock Gains Vs Pft-Taking

JAKARTA, July 21 (Dow Jones)--Indonesian shares closed flat Friday,
with selling in Bank Mandiri and telecommunication blue chips keeping
the main index in the negative territory, traders said.

Falls across Asian markets following a slump in U.S. stocks overnight
spurred profit-taking after sharp gains Thursday, but a firmer rupiah
against the dollar limited losses, traders added.

Bargain hunting in plantation stocks and cement blue chips also helped
to partly offset early losses, said a trader with BNI Securities.

The Jakarta Stock Exchange Composite index ended down 1.013 points, or
0.1%, at 1314.577, up from an intraday low of 1302.712.

Decliners led gainers 50 to 43, with 65 stocks ending unchanged.
Volume fell to 835 million shares valued at IDR939 billion, compared
with 995 million shares valued at IDR1.47 trillion Thursday.

At 0904 GMT, the dollar was trading lower at IDR9,145, compared with
Thursday's close of IDR9,170.

Indosat, the nation's second-largest telecommunication company by
asset value, fell 3.4% to IDR4,225 on ex-dividend trade, said a
trader.

Indosat's largest rival Telkom ended down 0.7% at IDR7,400 on
profit-taking after rising 4.2% Thursday. Brokers expect Telkom to
trade lower Monday on ex-dividend trade. Shareholders on record as of
Friday are eligible for a IDR218.86-per-share dividend.

Traders said profit-taking also hit Bank Mandiri, the nation's largest
bank by asset value, which fell 1.8% to IDR1,640 after rising 2.5%
Thursday.

On the upside, palm oil producer Astra Agro rose 2% to IDR7,550, while
rival London Sumatra rose 1.9% to IDR1,060, both on expectations of
solid 2006 earnings due to an increase in commodity prices.

Cement maker Semen Gresik rose 1.2% to IDR24,900 as investors
anticipated local conglomerate Rajawali group to sign an agreement
Friday to buy a 24.9% stake in Gresik from Mexico's Cemex for $337
million.

Dealers expect the market to trade lower Monday, led by selling in Telkom.

------------------------------------------------------

Indonesia Rupiah Ends Up As Dlr Falls Vs Asian Currencies

JAKARTA, July 21 (Dow Jones)--The Indonesian rupiah ended higher
Friday thanks to the dollar's slide versus other Asian currencies,
dealers said.

'The dollar's fall versus other regional currencies was the main
factor for the rupiah's rise,' a dealer with a local bank said.

The dollar closed at IDR9,145, versus its close Thursday at IDR9,170.

Dealers said bids from state banks, likely on behalf of importers,
prevented the greenback from falling further.

Dealers said the dollar may continue to fall Monday, but importers
will likely line up bids around IDR9,100 and could slow the fall.

'Dollar demand will likely build up next week as the end of the month
is drawing closer,' a dealer said.

Dealers expect the dollar to trade between IDR9,075 and IDR9,250 Monday.

-------------------------------------------

Eurocham to open two branch offices outside Jakarta

JAKARTA, July 21 (Asia Pulse/Antara) - The European Business Chamber
of Commerce (Eurocham) plans to expand its operations in Indonesia by
setting up branch offices in two major Indonesian cities in 2007,
namely Surabaya and Bandung, a spokesman said.

Eurocham`s chairman Jean Francois Fichaux said here on Thursday the
branch offices would be the first the chamber would have outside
Jakarta and were expected to help increase business cooperation
between Indonesia and the European Union.

"We have routinely conducted open and constructive dialogues with
Indonesian Chamber of Commerce and Industry (Kadin) executives. We
have seen many potentials that could be developed from both sides," he
said.

Eurocham is a non-profit forum for businessmen from 25 EU member
countries that have relations with Indonesia.

It has no other offices besides one established in Jakarta on May 11 in 2004.

After establishing branch offices in Surabaya and Bandung Eurocham
might later set up another branch office in Medan, North Sumatra,
which has large business activities.

Fichaux said his side had always sought an opportunity for doing
active business with its partners in Indonesia especially during the
Infrastructure Summit I.

He said the Eurocham had given contributions regarding infrastructural
development in the country such as solutions of problems and funding
questions.

"In the Infrastructure Summit II later we will also be active. This is
expected to be a momentum for increasing the relations between
Indonesian and Europena businessmen later," he said.

EU exports to Indonesia at present are worth 4.2 billion Euros while
its imports from the country reach 10.5 billion Euro.

-----------------------------------------------------------

Indonesia needs 10 new medium wheat flour factories

JAKARTA, July 21 (Asia Pulse/Antara) - Indonesia needs 10 medium size
wheat flour factories to reduce dependence on imports, which average
240,000 tons per day.

The association of sugar and wheat flour companies (Apegti) said an
opportunity is wide open for profitable investment in wheat flour
industry.

A factory with a production capacity of 50-60 tons per day will need
only an investment of Rp30 billion (US$3.3 million)-Rp50 billion,
Apegti chairman Natsir Mansyur said.

Natsir said construction of 10 medium size factories will not affect
the operation of four large factories, which have been in operation
for over 20 years in the country.

----------------------------------------------------------

Indonesia's Bank Mandiri revises down net profit target

JAKARTA, July 21 (Asia Pulse/Antara) - State Bank Mandiri has revised
down its target for net profit this year to around Rp1.1 trillion
(US$122 million) - Rp1.9 trillion from Rp2.56 trillion originally set.

With the new net profit target it is expected to pay between Rp550
billion and Rp950 billion in dividend including Rp380 billion-Rp656
billion to the government in 2007.

Previously the country's largest lender hoped to see a 324.2 per cent
increase in net profit in 2006 from Rp603.37 billion in 2005, when its
performance dropped over large non performing loans.

Large provision set against non performing loan considerably reduced
its net profit in 2005.

Analyst from PT UBS Securities Jioshua Tanja said Bank Mandiri is
expected to be able to fully recover and post proportional level of
profit only in 2008.

-----------------------------------------------------------

Indonesia's Telkom to hire Russian satellite

JAKARTA, July 21 (Asia Pulse/Antara) - State telecommunication company
PT Telkom said it will hire Russia's floater satellite to fill orbit
slot of 118 degree east longitude before its Telkom-3 satellite is
orbited in 2009.

Telkom President Arwin Rasyid said the government supports the plan to
hire the Russian satellite with an investment of around US$168 million
to save the orbit slot.

Arwin said talks with the Russians have come to final phase of
agreement to hire the floater satellite.

He said Telkom needs to coordinate with the satellite maker to place
it in the required slot.

He said Telkom-3 satellite built with an investment of US$120 million
will be launched only in 2009 to take over the position.

-------------------------------------------------------------

Broker call - Indonesia's Bakrie Brothers maintained a 'buy' - Danareksa

JAKARTA, July 21 (XFN-ASIA) - PT Danareksa Sekuritas said it is
maintaining its "buy" call on conglomerate PT Bakrie Brothers after
the company won the Kalimantan-Java gas pipeline development project.

"We maintain our 'buy' recommendation. We have not changed our
year-end share price target of 210 rupiah per share given the lack of
information at this stage," Danareksa said.

At 2.45 pm, Bakrie Brothers was down 5 rupiah at 170 on 224.27 mln shares.

The composite index was down 2.524 points at 1,313.066.

The brokerage house said going forward, the Kalimantan project should
be a positive earnings driver for the pipe and construction units.

Further upside may come from the gas distribution business given the
attractive gas price vis-a-vis the diesel price, it said.

"The license is for the transmission business. But given the expanding
distribution margin in the industry, Bakrie Brothers will, in our
view, also jump into the distribution business," it said, adding that
the company has to spend capex for the distribution network.

It said Bakrie might not enjoy such low gas prices as enjoyed by
state-owned Perusahaan Gas Negara as the current gas price is around 3
usd per mln British thermal units (mmbtu).

"Our preliminary analysis, based on 70 pct utilization, long-term
fixed gas costs of 5 usd per mmbtu, and terminal value growth of 3
pct, suggests that additional NAV (net asset value) from the project
is 206 rupiah per share," it said.

Earlier, the downstream oil and gas regulatory body BPH Migas awarded
the company the contract to build the 1,115-km long East
Kalimantan-Central Java gas pipeline at an estimated cost of 1.26 bln
usd.

The gas transmission rate is estimated at 700-1,000 mln cubic feet per
day (mmcfd) over 30 years with the first gas expected to be delivered
in the second half of 2009.

A memorandum of understanding has been signed with several potential
buyers, including Indonesia Power (300 mmcfd), Rabana Gas Indomakmus
(100 mmcfd), Persada Kriya Dwiguna (440 mmcfd), Bayu Buana Gemilang
(200 mmcfd) and Bakrie Power (100 mmcfd), Danareksa said.

The company has obtained financing commitments from several parties,
but details have not been disclosed yet, it said.

It said assuming 75 pct of the project will be funded by debt, Bakrie
Brothers will still have to inject some 315 mln usd into it, or less
should it bring in strategic partners. Therefore the company may have
to conduct a rights issue or other debt raising alternatives since the
parent company only has a small amount of cash -- some 140 bln rupiah
at the end of the first quarter 2006.

"However, debt raising should not be a major issue given the company's
equity base of 3.2 trln rupiah and the low level of debt at either the
parent company level or among the subsidiaries," Danareksa said.

It said using the South Sumatra-West Java project as the benchmark, in
which 50 pct of the total capital expenditure is spent on pipe
procurement, the opportunities for the pipe units are very good.

The company, it added, probably has to spend capital expenditure to
expand the current capacity.

"Assuming a 10 pct margin in the pipe business, additional earnings
will be some 40 mln usd, thus doubling 2006 fiscal year earnings," it
said.


It expects Bakrie to book net profit of 178.6 bln rupiah this year,
down from last year's 291.6 bln, with expected sales of 3.495 trln
this year compared to 2.738 trln last year.

The brokerage firm however warns of possible inadequate gas supply
since the company will be responsible for securing the gas.

"This is a major risk given that the Kalimantan gas producers (Total,
Chevron, and Vico) appear reluctant to sell gas to the domestic market
because of better export pricing," it said.

"The readiness of the Trans Java pipeline is also critical as the
Kalimantan network will be linked with it," Danareksa said.

------------------------------------------------------------

Stockwatch - Indonesia's Sumalindo sharply higher on rumor new
investor coming in

JAKARTA, July 21 (XFN-ASIA) - Shares of PT Sumalindo Lestari Jaya, an
integrated wood-based company, were sharply higher in midafternoon
trade on a rumour that Putera Sampoerna, former owner of cigarette
maker PT HM Sampoerna, is planning to buy the company, dealers said.

They said the speculation triggered buying interest in the stock.

At 3.20 pm, Sumalindo Lestari was up 100 rupiah or 9.62 pct at 1,140
on 16.63 mln shares.

The composite index was down 1.906 points or 0.14 pct at 1,313.684.

A dealer with a local brokerage said Sumalindo's share price jumped on
a market rumour that the former owner of HM Sampoerna, Putera
Sampoerna, is in talks with Sumalindo management for a possible buyout
offer.

He said the rumour is not that surprising since Putera Sampoerna is
now looking to find new ventures since it sold its company, HM
Sampoerna.

The Sampoerna family is now sitting on a huge cash pile after selling
its entire 40 pct interest in HM Sampoerna last year to Marlboro
producer Philip Morris International for roughly 18.6 trln rupiah.

Philip Morris is owned by the Altria Group Inc.

"Sumalindo's financial condition would certainly improve if Sampoerna
bought Sumalindo since the Sampoerna family has a lot of cash from the
sale of its cigarette firm," the dealer said.

He said Putera Sampoerna may indeed be interested in buying the
company as the prospects of the pulp business remain bright.

"Sumalindo shares have been illiquid for sometime. The rumour has
certainly triggered speculative buying in the stock," he said.

Sumalindo Lestari Jaya earlier proposed to sell 152.97 mln new shares
at 1,000 rupiah each via a rights issue. In its prospectus, the
company said every 11 shares on record as of July 6 would entitle the
holder to buy two new shares.

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Malaysia's Astro to increase investment in Indonesia

JAKARTA, July 21 Asia Pulse - Malaysian operator of television station
Astro All Asia Networks Plc (KLSE:5076) said it will increase its
investment in Indonesia by US$140 million in the next three to five
years.

The fund will be invested in a joint venture, PT Direct Visiion, a pay
television company in Indonesia, Ralph Marshall, group chief executive
of Astro said.

Astro has a 20 per cent stake in PT Direct Vision, which provides 48
subscription channels including five channels in Indonesian language.

Ralph said the investment reflects strong commitment of the company to
continue investment in Indonesia.

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Malaysia Plantations Risk Losing Licenses By Open Burning

KUALA LUMPUR, July 21 (Dow Jones) -- Authorities will cancel Malaysian
plantation owners' licenses if they burn vegetation to clear land, an
annual ritual that produces a pervasive, hazardous haze, an official
said Friday.

The Malaysian Palm Oil Board can punish errant plantation owners by
revoking their permit to sell palm oil, an aide to Plantations
Industries and Commodities Minister Peter Chin told The Associated
Press, speaking on condition of anonymity because he is not authorized
to make media statements.

"Let this be a warning," The New Straits Times quoted Chin as saying.
"We are monitoring the plantations in Malaysia very closely."

The return of a now annual haze early this week has prompted
authorities to announce plans for cloud seeding - when rain is
chemically induced.

At least three areas in Malaysia reported unhealthy air quality
earlier this week, although conditions have since improved.

The choking haze often occurs during the midyear dry season, when
farmers - some in Malaysia but most in Indonesia- set illegal brush
fires to clear land for planting.

Last year, air pollution reached such critical levels that Malaysia
declared a state of emergency.

Singapore and Malaysia have repeatedly complained to Indonesia about
the fires over the past decade, and have offered various forms of
help. Economically struggling Indonesia says it lacks the resources to
fight the fires and enforce anti-burning laws.

Malaysia and Indonesia have agreed to step up enforcement against open
burning, Chin was cited as saying.

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Indonesia palm oil market slow, players eye prices

JAKARTA, July 21 (Reuters) - Players retreated from the Indonesian
palm oil market awaiting fresh price leads from Malaysia's crude palm
oil futures next week, traders said.

The state marketing centre in Jakarta failed to sell 1,500 tonnes of
crude palm oil offered in a government auction due to low bids.

The centre, which sells palm oil from state plantations, offered CPO
at 4,108 rupiah ($0.449) a kg, but buyers bid at 4,081 rupiah a kg.

There were no local auction in Medan, the capital of North Sumatra and
key port for palm oil exports. On Thursday, CPO was traded at 4,075
rupiah a kg in Medan.

"It's a quiet day today. Most players have done trading in previous
days when the market was up," said a trader in Medan.

"Malaysia is also a bit lower today because of technical correction,
so players are watching if it will go up again next week."

In Jakarta, RBD palm olein was quoted at 4,500 rupiah a kg, up from
4,460 rupiah a kg on Thursday following rallies in Malaysia crude palm
oil futures, said a trader in Jakarta.

 A decision by the world's top palm producers -- Malaysia and
Indonesia -- to set aside 40 percent of their annual output for
biodiesel and Malaysia's strong palm oil exports prompted rallies in
Malaysia crude palm oil futures on Thursday.

The benchmark third-month October contract <KPOV6> on the Bursa
Malaysia Derivatives closed up 3.3 percent to 1,591 ringgit ($432) a
tonne on Thursday.

But on midday Friday, Malaysian crude palm oil futures fell, dragged
down by profit-taking with the October contract down 15 ringgit at
1,576 ringgit ($428) a tonne.

Exports, however, remained sluggish with players still eyeing price movements.

There were no offers for August shipment.

Offers for September shipment were seen at $420 a tonne, up from
$417.5 a tonne, free on board Belawan on Thursday. Bids stood at $415
a tonne, up from between $410 and $412.5 a tonne on Thursday. There
were no deals reported.

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Asia Rubber-TOCOM rallies almost 2 pct but outlook bearish

TOKYO, July 21 (Reuters) - Tokyo rubber futures rallied almost two
percent on Friday as active short-covering emerged following recent
steep losses, but gains were capped by growing views that the current
tight supply situation will ease shortly.

Tokyo Commodity Exchange rubber prices <0#JRU:> rose sharply in the
late afternoon after trading lower from the previous day for most of
the session.

Traders said several brokerage houses were detected buying in large
lots in late trade, partly on views market sentiment will brighten
after the expiry of the spot July contract on Tuesday.

Others said falling domestic rubber stocks could have attracted strong
short-covering ahead of the weekend.

But most traders believed the overall outlook was weak amid growing
views that the market would see more supplies from Thailand and
Malaysia in the short-term.

Benchmark December TOCOM rubber closed at 279.2 yen a kg, up 5.4 yen
or 1.97 percent from Thursday.

Active short-covering emerged after dipping to a session low of 270.6 yen.

The key contract rose above the 100-day moving average of 276.9 yen,
but most traders still believed the technical trend for rubber was
heading downwards.

Traders were still keen to fill in a technical gap between 271.3 yen,
the low reached on May 10, and 267.8 yen, the high hit on May 9.

Traders said key TOCOM rubber also could fall towards the 200-day MA
of 246.8 yen.

"The market is concerned about the tightness in nearby supplies, but
we are hearing that many supplies will head to Japan in August," said
Shuji Sugata, assistant manager at Mitsubishi Corp Futures and
Securities Ltd.

"We saw some support around 270 yen, but the topside of the market
looks extremely weighted," Sugata said.

The latest data from the Rubber Trade Association of Japan showed that
crude rubber stocks held at private Japanese warehouses amounted to
11,679 tonnes as of July 10, down from 13,232 tonnes as of June 30.

Inventories have fallen by about 36 percent since this year's peak of
18,315 tonnes marked on May 20.

Some tightness in rubber supply was noted in Indonesia, the world's
second-largest producer after Thailand, as the wintering season
continued in parts of Sumatra island.

During the wintering season, rubber trees shed their leaves and latex
output declines.

But worries about supplies were limited because of healthy production
in other countries such as Thailand and Malaysia.

In Thailand, benchmark RSS3 rubber sheet for August shipment was
assessed around $2.35-$2.40 a kg free on board (FOB), compared with
$2.40 on Thursday.

Tyre-grade Standard Thai Rubber, or STR20 block, for August shipment
was also around $2.35-$2.40 a kg.

Malaysia's tyre-grade SMR20 was little changed around $2.40.

The price of Indonesia's tyre-grade SIR20 edged up to $2.26-$2.27 a kg
FOB from around $2.20-$2.30 Thursday.

In Shanghai, the most heavily traded October rubber contract <0#SNR:>
was at 23,825 yuan per tonne, down 270 yuan compared with Thursday's
settlement.

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Joyo Indonesia News Service
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