Asia Rubber-Few deals; market on edge ahead of new China rules, Thai buying

* China mulling change to content of compound rubber

* Traders waiting for more purchases by Thai govt fromfarmers

By Manolo Serapio Jr

SINGAPORE, Nov 14 (Reuters) – Tyre-grade rubber prices weremostly unchanged this week in Asia as sellers exercised cautionahead of new import regulations in top buyer China and waitedfor top exporter Thailand to make good on its interventionpledge.

China’s Standards Administration published a draft law inAugust that would require compound rubber to contain no morethan 88 percent of natural rubber from Jan. 1 next year, versusthe current 95-99.5 percent.

The draft has been criticized by industry participants whosay it will take time and raise their costs to change overequipment to produce the new mixture.

“The market’s at a standstill waiting for clarity on theChina policy. How can you sell when you don’t know whether thiswill ship or not?” asked a trader in Kuala Lumpur who saidrubber being processed now is typically for shipment in January.

China’s planned rule change has helped boost local prices”because it should push up the use of some domestic rubber”,said Quan Shuwen, senior analyst at Dongwu Futures.

Analysts say major tyre manufacturers are unlikely to usethe new compound rubber, which would be of lower quality, andcould consume more locally produced natural rubber.

Shanghai rubber has risen almost 3 percent thisweek, versus 2 percent gains in benchmark Tokyo futures.

Thailand’s STR20 grade was sold at $1.53-$1.58 per kg whileRSS3 changed hands at $1.63-$1.67/kg, mostly steady from lastweek, said a trader based in Hat Yai in southern Thailand.

A Malaysian trader said he did not see much physicalactivity this week, with the Thai STR20 offered at $1.60/kg andMalaysia’s SMR20 offered at $1.59/kg.

Traders were waiting for the Thai government to make good onits commitment to buy rubber from farmers as part of a 58billion baht ($1.8 billion) subsidy plan approved last month.

Thailand’s Rubber Estate Organisation has only bought oncethis month so far, purchasing a small quantity of rubber fromfarmers last week, traders said.

The Thai measures along with a minimum-price commitment byAsian producers have helped global prices recover from five-yearlows, but the market remains depressed and producers will meetagain next week to look at more measures, including restrictionson supply to global markets. (Reporting by Manolo Serapio Jr.; Additional reporting byDominique Patton in Beijing; Editing by Himani Sarkar)

– Reuters