Indonesian rubber changed hands at premiums to Thai and Malaysian grades due to limited supply, while fears of defaults gripped the physical market after several shipments to China were delayed, dealers said on Friday.
Buyers in top consumer China have asked shippers in Southeast Asia to postpone delivery of up to 7,000 tonnes of the commodity because of high inventory in the Qingdao bonded area, which makes up the bulk of the country's rubber stocks. While delays affected Thai and Malaysian grades, many sellers of Indonesia's SIR20 tyre grade held on to their inventory due to supply shortages in the main growing island of Sumatra. December SIR20 was traded at $4.0 to $4.05 a kg. "There's shortage of raw material in North Sumatra, although I don't think it's any longer related to wintering," said a dealer in Medan, the provincial capital of North Sumatra. "We are entering the rainy season and this will last until December."
In the southern part of Sumatra, however, the dry wintering season is progressing, causing minor delays in delivery and pushing the price of SIR20 above Thai RSS3 for the first time in several years. Rubber trees shed their leaves and latex output slows during the wintering season. Rains will also disrupt rubber tapping, which is normally done in the morning. "We've seen a bit of delays in shipments so far, but there's no need to worry because there's plenty of rubber in Thailand," said a dealer in Singapore. "The Thais have been affected by delays from Chinese buyers."
Buyers in China, the world's largest rubber consumer, have asked shippers in Southeast Asia to delay delivery of up to 7,000 tonnes of the commodity because of high inventory, raising fears of defaults, dealers said on Friday. Rubber stocks in China's bonded warehouse in Qingdao were estimated by dealers at more than 200,000 tonnes. Inventory in the Qingdao bonded area, which makes up the bulk of the country's rubber stocks, is not disclosed."I know we have at least 1,500 metric tonnes delayed, and we are very nervous," said a dealer in Singapore. "We've had three defaults, but the tonnage is not big," said the dealer, who declined to give other details.
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