SINGAPORE: Falling rubber prices spurred buying from trading houses this week but buyers from China were nowhere to be found despite persistent rumours the country was buying Thai cargoes to build up stockpiles, dealers said on Wednesday.
Talks first surfaced in mid-September that main rubber consumer China plans to buy 50,000 tonnes of rubber from the overseas market, most likely the Thai RSS3 grade, and the rest locally, but dealers have been unable to confirm any purchases.
Thai, Indonesian and Malaysian tyre grades changed hands among trading houses at between $2.29 and $2.44 a kg for December delivery in a series of deals late on Tuesday.
“I think the market is getting tired of these rumours on stockpiling,” said an analyst in Tokyo.
“Without fresh leads, I don’t think the market can move higher,” said the dealer, referring to benchmark rubber futures on Tokyo Commodity Exchange.
The most active April contract on TOCOM climbed 1 percent in early trade to a high of 264.8 yen ($2.69) a kg on a weaker yen. Prices have dropped more than 12 percent this year, partly due to global economic worries.
Shanghai rubber futures, which often influence the Tokyo market, added 275 yuan to 20,045 yuan ($3,291) a tonne.
“What I understand is Shanghai futures were very high. So Chinese dealers were able to buy the RSS3 from Thailand and tender into Shanghai,” said a dealer in Singapore.
“But that was the main game early on,” said the dealer, adding that talks about the stockpiling have yet to subside despite a lack of evidence of China’s purchases.
China imported 1,666,815 tonnes of natural rubber in January to September this year, up 5.5 percent from the same period last year. It mainly buys rubber from Thailand, Malaysia, Indonesia and Vietnam.
Thai RSS3 was offered on $2.50 a kg on Wednesday, down from last week’s traded prices of $2.575. Another Thai grade, STR20, was traded at $2.38 to $2.42 a kg late on Tuesday.
Dealers shrugged off a plan by Thai rubber farmers to intensify protests after the government rejected their calls for Bangkok to buy their output at prices higher than the market.
Angered by steep falls in prices, the farmers want the government to buy rubber sheet from them at 100 baht ($3.22) per kg, more than a third higher than the market price on Tuesday of 72 baht. They have snubbed a subsidy offered last month.
Indonesian SIR20 grade was sold overnight at 104.25 U.S. cents a pound to 104.50 cents for December delivery ($2.29 to $2.30 a kg), down from between 105.75 and 107.25 cents a pound last week.
Malaysian SMR20 was traded at $2.43 to $2.44 a kg, down from 2.465 a last week.
WEEK AHEAD
Next week, tyre grade prices are likely to track the fortunes of TOCOM rubber, which is often influenced by macroeconomics, currencies, equities and crude oil.
($1=98.14 yen)
($1=6.09 yuan)
Source: Reuters
