* Inventory down to 330,300 T from 341,900 T in early July
* Tyre makers opt for cheaper local stocks on economy worries (Adds analysts’ quotes)
(Reuters) – Inventory of imported rubber in China’s bonded warehouses in Qingdao fell 3.4 percent over a two-week period as tyre makers shifted to cheaper local stocks on worries about the economy, trade sources said.
The dip in the closely watched numbers could mean more pressure for global rubber prices as tyre makers – the biggest importers of rubber – check their overseas purchases.
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Tyre-grade prices have sunk to multi-year lows on worries about global economic growth and weakening demand from top rubber user China, which accounts for 35 percent of global consumption.
Rubber stocks at Qingdao, which make up the bulk of China’s inventories, currently stand at 330,300 tonnes, down from 341,900 tonnes in early July but still above the usual level of 250,000 tonnes, the sources said on Wednesday.
Inventories in the bonded warehouses are not disclosed publicly, but dealers and analysts collect data on quantities from offices in Qingdao, where tyre grades are a few U.S. cents cheaper than those offered in Southeast Asia.
“The Chinese don’t import rubber as much as they did last year. We can also see tyre makers are stepping up the pace in using the stocks in China,” said Gu Jiong, an analyst at Yutaka Shoji Co in Tokyo.
“I think the inventory can continue to drop, maybe to 230,000 tonnes.”
Preliminary June customs data showed China’s natural rubber imports fell to 130,000 tonnes from 180,000 tonnes in May. Synthetic rubber imports slipped 18 percent.
Inventory in Qingdao consists of natural, synthetic and compound rubber.
China’s annual GDP growth slowed to 7.5 percent in April to June – the ninth quarter in the last 10 that expansion has weakened – putting pressure on Beijing to quicken reforms rather than slow them to take up the economic slack.
“The stocks are very high anyway, so they need to draw them down,” said Lee Chen Hoay, investment analyst at Phillip Futures in Singapore.
“The drop in the inventory is indicative of less import demand, although we may see a pick up in economic activity in the second half of this year.” (Reporting by Lewa Pardomuan; Editing by Muralikumar Anantharaman)
Source: Reuters
