Asia Rubber-China buys tyre grades, stockpile talk abuzz

September 19, 2013

* RSS3 sold at $2.63-$2.65/kg; STR20 at $2.45-$2.47 FOB

* SIR20 sold at 107.50-109.25 cents/lb; SMR20 at $2.48 a kg

* Rumours of China stockpile buoys market

By Lewa Pardomuan

SINGAPORE, Sept 19 (Reuters) - China bought some rubber cargoes from Thailand and Indonesia for nearby delivery and could be looking for more as the market was abuzz with talk the world's largest consumer could stockpile again, dealers said on Thursday.

A drop in the rubber inventory in the bonded warehouses in Qingdao and a sharp rebound in Tokyo rubber futures also raised hopes of more purchases in coming weeks. China accounts for about 35 percent of global rubber consumption.

Thai RSS3 for November delivery changed hands among trading houses at $2.63 to $2.65 a kg late on Wednesday, down from $2.70 to $2.72 two weeks ago. Another Thai grade, STR20, was sold to China via dealers at $2.45 to $2.47 free on board, versus $2.50 to $2.54 kg including freight two weeks ago.

The overnight deals did not reflect Thursday's rally on the benchmark Tokyo Commodity Exchange (TOCOM), where the most active February contract jumped more than 3 percent after the U.S. Federal Reserve surprised markets by postponing a scale-back of its monetary stimulus.

Dealers expected higher traded prices later in the day, tracking Tokyo futures.

"There are two things: stocks in China are easing and I think the Chinese government is going to buy rubber for stockpiling. But nothing is concrete yet," said a dealer in Singapore.


Last year, China announced it would buy up to 200,000 tonnes of rubber from the domestic market to support prices but dealers said only a fraction was purchased by the end of 2012.

In recent weeks, Chinese buyers have increased their presence in the physical market, sparking speculation the government may announce the stockpiling plan soon. China is also seen replenishing stocks following a drop in the inventory in Qingdao.

China was in the market even on Wednesday, buying rubber via appointed dealers, traders said. Chinese markets are closed on Thursday and Friday for the Mid-Autumn Festival holiday and will reopen on Monday.

Rubber stocks at Qingdao, which are closely watched and make up the bulk of China's inventory, fell to 283,000 tonnes on Sept. 17 from 295,000 tonnes on Aug. 30. Stocks in the bonded warehouses are not disclosed publicly, and dealers and analysts collect data on quantities from offices in Qingdao.

Among other grades, Indonesia's SIR20 was traded at 107.50 to 109.25 U.S. cents a pound ($2.37 to $2.41 a kg) FOB, down from 112.75 cents last week. The buyers were dealers from Singapore, who normally ship rubber to China.

Malaysia's SMR20 was traded at $2.48 a kg late on Wednesday, unchanged from last week. Chinese consumers were not among the buyers as they were looking to strike deals at $2.44 to $2.45 FOB.


WEEK AHEAD

Hopes of more purchases from China could lift the physical prices next week, but the market has largely ignored recent protests by Thai farmers unhappy about weak prices.

"So far, we haven't received reports of major disruptions in deliveries," said a dealer in Thailand.

Protesters blocked a highway in southern Thailand for a second day on Tuesday in a bid to force the government to increase a subsidy for rubber farmers, even though a curfew was imposed in the area after clashes with riot police. (Editing by Muralikumar Anantharaman)