A few tyre grade cargoes changed hands for nearby shipments this week but some consumers could be waiting for bargains as prices held near multi-year lows despite tight supply, dealers said on Tuesday. The dry wintering season is underway in Thailand, Indonesia and Malaysia, which account for about 70 percent of global natural rubber output, causing leaves to fall and curbing the flow of latex.
But the seasonal event has done little to stir up the benchmark Tokyo Commodity Exchange (TOCOM), while physical prices on the Singapore Commodity Exchange are still near their weakest level in five years. Indonesian and Thai grades changed hands at around $1.87 to about $2.00 a kg in a series of deals late on Monday. "It looks like the current movements are driven by a rise in oil prices. It has nothing to do with the tight supply," said a dealer from Medan, the provincial capital of North Sumatra, referring to recent gains on Tokyo rubber futures.
Indonesia's SIR20 rubber was sold to trading houses at 85.00 to 85.25 US cents a pound for April delivery, down sharply from 89.75 to 90.00 US two weeks ago, which suggested that a rebound in Tokyo failed to support physical prices. The most active August contract on TOCOM added 1.5 yen kg to 226.2 yen due to a sharp jump in oil prices and a weaker yen on Tuesday. It tumbled to 18-month lows in early February on concerns over demand from top consumer China.
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