China buys SMR20 rubber at lowest prices since late 2009

Thursday, 28 June 2012 00:22 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): China bought several cargoes of Malaysian rubber after prices plunged to the weakest in more than two years, raising hopes the world’s largest consumer will step up purchases and turn to other grades too, dealers said on Wednesday.

SMR20 was sold to China in a series of overnight deals at $2.83 to $2.84 per kg, free on board, for August shipment - the lowest since at least December 2009. Indonesian SIR20, currently at four-year lows, was sold at about $2.78 per kg to dealers in Singapore, who normally ship the grade to China.

“China has returned to the market on a price dip. The quantity is good. We and other companies sold a few thousand tons of SMR20. They are buying a lot,” said a dealer in Kuala Lumpur. “Supply is not really an issue here.”

Thai RSS3 grade was traded among trading houses and to tyre makers at $3.04 to $3.05 per kg for August-September shipment, the weakest price since early 2010 and well below a lifetime high of $6.40 per kg in February 2011.

SIR20 was traded late on Tuesday 126.25 U.S. cents per pound for August, 126.75 cents for October-December and at 127.25 cents for January-March.

Bridgestone Corp, the world’s largest tyre maker, sought to buy SIR20 at 126.50 cents on Wednesday, having purchased the grade at about 129 cents in a series of deals last week, said dealers.

Tyre grade prices have dropped to the current levels after Tokyo rubber futures were hit by persistent selling caused by worries that the debt crisis in Europe would hurt demand for commodities.

Tokyo futures set the tone for physical prices in Asia, but the contracts are influenced by macroeconomics. The most active contract sank to its weakest level since November 2009 this week despite efforts by top producer Thailand to support prices.

Thailand has bought only a fraction of the 200,000 tons of rubber sheet it planned to purchase under a government intervention scheme and is now looking for sales to China to help prop up prices, the Thai deputy agriculture minister said.

China imported 822,654 tons of natural rubber in January to May 2012, up 7.41% from a year earlier. Imports in May alone jumped more than 40 percent to 175,830 tons.

“China is buying, but it all depends on the prices,” said a dealer in Singapore.