Asian rubber: few cargoes of tyre grades changed hands

Few cargoes of tyre grades changed hands for nearby delivery this week, with supply constraints in Indonesia expected to defy pressure from lack of demand from main consumer China and declines in Tokyo futures, dealers said on Friday. Indonesia's SIR20 grade was sold at between $3.81 and $3.835 a kg for November shipment late on Thursday, down from around $4.10 in early October.
Thai grades were traded at around the same levels as SIR20. "Prices are all over the places lately. China is sluggish and we've only sold rubber to trading houses," said a dealer in Indonesia's main growing island of Sumatra. "But there are worries shipments could be delayed because it's so difficult to get raw material." Wintering has started in the southern part of Sumatra, when rubber trees shed their leaves and latex output slows. In early October, Indonesia's SIR20 traded at premiums against Thai RSS3 for the first time in several years because of tight supply.
While some dealers were reluctant to offer SIR20 on worries they would not be able to get raw material, shippers in top rubber producer Thailand were keen to sell rubber, with supply unaffected by the country's worst flooding in five decades. RSS3 changed hands at between $3.80 and $3.85 a kg for November shipment late on Thursday. The Thai grade, considered the benchmark physical prices, has dropped from a record of $6.4 in February, partly because of losses in Tokyo futures.
The most active rubber contract on the Tokyo Commodity Exchange, currently March 2012, fell to its lowest since August 2010 at 275.2 yen a kg on Friday on worries Europe's debt crisis could hurt demand for commodities. Malaysia's SMR20 was traded at around $3.90 a kg. "China is still holding back and their bid price is well below market price. This has been happening in the last couple of days," said a dealer in southern Thailand. "We haven't heard about major disruptions caused by the floods. But people may encounter problems when sending rubber to ports."
Water now covers a third of Thailand's provinces, some 4 million acres (1.6 million hectares) in the north, north-east and centre of the country. But the floods are unlikely to have any direct impact on the rubber industry, as most rubber factories and trading are located in the south, which has not been affected.