Asia Rubber-China buys tyre grades, stockpile talk abuzz

Reuters

* 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 rubbercargoes from Thailand and Indonesia for nearby delivery andcould be looking for more as the market was abuzz with talk theworld's largest consumer could stockpile again, dealers said onThursday.

A drop in the rubber inventory in the bonded warehouses inQingdao and a sharp rebound in Tokyo rubber futures also raisedhopes of more purchases in coming weeks. China accounts forabout 35 percent of global rubber consumption.

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

The overnight deals did not reflect Thursday's rally on thebenchmark Tokyo Commodity Exchange (TOCOM), where the mostactive February contract jumped more than 3 percentafter the U.S. Federal Reserve surprised markets by postponing ascale-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 Ithink the Chinese government is going to buy rubber forstockpiling. But nothing is concrete yet," said a dealer inSingapore.

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

In recent weeks, Chinese buyers have increased theirpresence in the physical market, sparking speculation thegovernment may announce the stockpiling plan soon. China is alsoseen replenishing stocks following a drop in the inventory inQingdao.

China was in the market even on Wednesday, buying rubber viaappointed dealers, traders said. Chinese markets are closed onThursday and Friday for the Mid-Autumn Festival holiday and willreopen on Monday.

Rubber stocks at Qingdao, which are closely watched and makeup the bulk of China's inventory, fell to 283,000 tonnes onSept. 17 from 295,000 tonnes on Aug. 30. Stocks in the bondedwarehouses are not disclosed publicly, and dealers and analystscollect data on quantities from offices in Qingdao.

Among other grades, Indonesia's SIR20 was traded at 107.50to 109.25 U.S. cents a pound ($2.37 to $2.41 a kg) FOB, downfrom 112.75 cents last week. The buyers were dealers fromSingapore, 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 thebuyers as they were looking to strike deals at $2.44 to $2.45FOB.

WEEK AHEAD

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

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

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

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