Asia rubber: Chinese buyers strike deals; stocks watched

Friday, 1 February 2013 00:01 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Chinese consumers struck deals to buy a few cargoes of rubber for nearby shipment but high inventory in the world’s top consumer could curb buying interest ahead of the Lunar New Year break, dealers said on Tuesday.

Indonesia’s March SIR20 was sold to China at 137.25 U.S. cents a pound ($3.03 a kg) on a free-on-board basis in a series of overnight deals, while Malaysia’s SMR20 was traded at $3.145 a kg. There were also deals to China for Thai STR20 grade, traders said.

“You can detect some buying interest at certain points, but definitely the high stocks in China is still a factor why they are not buying much,” said a dealer in Thailand.

STR20 was traded at $3.09 to $3.10 a kg FOB, or $3.11 to $3.12 including freight to China. The grade was sold at $3.11 to $3.12 last week without freight before falling to track volatile Tokyo futures.

Another Thai grade, RSS3, was offered at $3.24 to $3.25 a kg, down from the traded price of $3.32 last week.

The Tokyo Commodity Exchange’s most-active rubber contract for July delivery ended 1.1 yen a kg lower at 312.6 yen as speculators booked profits from recent highs. The contract had touched an intraday low of 309.6.

A weaker yen helped TOCOM rubber touch a nine-month high of 321 yen on Jan. 11, and dealers expected the Tokyo market to trade in a volatile 305 to 321 yen range this week.

Rubber inventories in Shanghai warehouses, which have been rising to record levels since November, posted their largest weekly fall in nine months, data from the exchange showed on Friday, but the decline was largely due to storage regulations that have forced some merchants to withdraw stocks.

Despite the drawdown, the stocks are still within sight of their highest levels in more than two years.

Dealers also estimated stocks at bonded warehouses in Qingdao at around 300,000 tons. Inventory in Qingdao, which normally stands at around 200,000 tons, is not disclosed to the public, but makes up the bulk of China’s rubber stocks.

China imported 2.18 million tons of natural rubber in 2012, up 3.64 percent from 2011, mainly from Thailand, Indonesia and Malaysia. It accounts for 35 percent of global natural rubber consumption.

“I think the stock levels are still OK. Chinese buyers are also buying compound rubber to avoid paying the import duties,” said a dealer in Singapore, who sold Indonesian and Malaysian rubber to China late on Monday.

Dealers in Indonesia said Bridgestone Corp, the world’s largest tyre maker, bought SIR20 at 137 U.S. cents a pound for April shipment.