China and India are chasing rubber for nearby shipment, while year-end covering from other consumers as well as tight supply in Southeast Asia could help prices extend gains, dealers said on Wednesday.A combination of dry and wet weather curbed tapping in Indonesia's main growing island of Sumatra while heavy rains in Malaysia could also cut supply in coming weeks.
In Thailand, floods have already played havoc with rubber tapping. Thai RSS3 grade changed hands late on Tuesday at $3.45 a kg for January shipment, and STR20 at $3.44 a kg, up from $3.25 last week as physical prices improved on gains on Tokyo rubber futures, supply worries, and a move by producers to blacklist defaulters. "Business has been done among traders, but it's likely that some of the cargoes are bought by Indian buyers," said a dealer in Kuala Lumpur, who trades Thai and Malaysian grades."The Indians are buying, but mostly the Thai grades because Indonesian rubber is still at a premium." Indonesia's SIR20 tyre grade was sold at 156 to 157 US cents per pound ($3.44-$3.46 per kg) for January and February shipment. Premium grade SIR20 traded at higher prices late on Tuesday.
The price of SIR20, which used to be the cheapest grade in Southeast Asia, began to exceed Thai rubber in early October after a dry wintering season in the southern part of Sumatra cut the flow of latex. The northern part of the island entered the rainy season recently, which also hit supply. "Prompt rubber, as in December and January, is mostly sold out among prime shippers," said a dealer in Singapore. "China is buying and India is also buying. Prime SIR20 was traded last night at 158 cents a pound."
Malaysian SMR20 was sold at $3.40 a kg for January shipment, probably to top consumer China.Dealers waited for the ASEAN Rubber Business Council to publish a list of blacklisted buyers after a plunge in rubber prices prompted some consumers to default on shipments and ask for a discount. The ARBC decided in a meeting in Hanoi at the weekend that it would act against defaulters, ask members to stop dealing with them, and would assist members who wish to pursue court cases against defaulting buyers. "The list has not been shared yet.
They are still waiting for some legal advice because they don't want to be sued by customers," said the dealer in Kuala Lumpur.Rubber prices have halved since hitting a lifetime high of $6.40 a kg in February, on fears that the debt crisis in Europe could hurt demand, and recently after top consumer China told sellers it wanted to renegotiate prices.
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