China's State Reserves Bureau plans to buy an additional 10,000 tonnes of locally produced natural rubber, bringing its planned April purchase to 65,000 tonnes, a source familiar with the situation said on Friday. The state reserves made the change to its original plan after more discussion with representatives from state farms in Hainan and Yunnan, the source said.
"The purpose of state reserves purchase is to stabilise rubber prices and protect the farmers," said the source, adding that the state reserves is likely to make more purchases after April. Rubber prices collapsed in the second half of 2008, amid the worsening global financial crisis. "Demand from tyre makers has not picked up yet, as we just came out of the Lunar New Year holidays," said an official at one of China's top rubber producing firms.
The additional tonnage will be split evenly between Yunnan and Hainan, China's top two rubber producing provinces. The purchase price was unchanged from Thursday at 14,600 yuan ($2,136) per tonne, the source said.
The key rubber futures contract at the Shanghai Futures Exchange for May delivery continued to slide on Friday morning, down 2 percent from the previous days' settlement at 12,715 yuan per tonne. The influence of state reserves purchase on the market has been overshadowed by the worries on the overall economy and bleak demand outlook, analysts and traders said.
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