Indonesia sold some tyre-grade SIR20 rubber to Singapore dealers on Tuesday, but trading was muted in other producing countries in Southeast Asia despite expectations of more buying by China.
SIR20 was sold at 73.625 US cents per pound ($1.62 per kg) free on board Begawan port in North Sumatra for February shipments. The grade was sold late on Monday at 73.50 cents per pound FOB Plumbing in South Sumatra for January shipments.
There were no details on final destinations, but dealers said China, the world's largest rubber consumer, normally buys rubber through Singapore dealers. "We heard some people tried to offer rubber at 74 cents but no deals were done.
Demand is still there and I think buyers will concentrate on buying February and March cargoes," said a dealer in Padding, the provincial capital of West Sumatra. Offers stood at 73.75 cents FOB Plumbing for January/February shipments, up from 73.25 cents on Monday.
The price tracked gains in Tokyo rubber futures, which hit a new 17-year high of 210.7 yen per kg before losing some of the gains to profit taking. Trading resumed in top producer Thailand after a holiday, with a firm Tokyo market lifting local prices.
Standard Thai Rubber or STR20 block, for January-February shipment rose to $1.65 a kg from $1.61 last week, free on board.
Some dealers said activity could pick up this week, as tyre makers are likely to replenish stocks ahead of Christmas. "Other buyers may slow down in the second half of December because of Christmas but not China," said a dealer in Thailand's southern town of Hat Yai.
"The problem is China won't be able to pay at current prices. It's too high for them. I haven't heard any inquiries today and I think the Tokyo market is still uncertain," he said. Dealers said a weaker yen and the recent rally in crude oil prices, not physical demand, had supported the Japanese futures.
Rubber prices often benefit from high crude oil prices because investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product. Oil traded below $60 on Tuesday, pausing from a four-day rally fuelled by an extended chill in thus Northeast that should stoke demand in the world's biggest heating oil market.
"US buyers were nowhere to be found yesterday. They think gains in Japan don't justify rises in the physical market," said the Padding dealer. Trading was quiet in Malaysia, where SMR20 was steady at between $1.61 and $1.64 a kg.
China's rubber futures were hit by profit taking after on Monday's sharp gains. On the Shanghai Futures Exchange, the most active March rubber contract fell 15 yuan ($1.86) per tonne to 17,245 in afternoon trade.