Bridgestone and Goodyear were in the market for Indonesian tyre grade, while top consumer China chased some cargoes of Thai rubber after prices dropped from record highs, dealers said on Thursday.
SIR20 changed hands at 235 and 235.50 US cents a pound($5.18 to $5.19 a kg) for April delivery late on Wednesday, down from a record of 262 cents traded two weeks ago. Prices of tyre grades have slipped from all-time highs, tracking a correction in Tokyo futures (TOCOM).
"I think there are still a lot of longs out there, who hold rubber at very low prices," said a dealer in Singapore, who mainly trades Indonesian rubber. "These guys will probably keep selling off and depress the market." Thai RSS3 was traded at $5.99 to $6 a kg, off a record-high at $6.40. Thai STR20 was done at $5.25 and Malaysian SMR20 changed hands at $5.23 a kg.
China, the world's largest consumer, showed more interest in Thai rubber after the differentials between STR20 and SIR20 narrowed to around 7 cents. The Thai grade was 12 cents more expensive than SIR20 last week. "China is always waiting for lower prices, and we saw some active buying last week. TOCOM has stabilised a bit, but I guess they will continue top buy albeit in small volumes," said a dealer in Thailand's southern city of Hat Yai.
"When STR20 is on par, or very close to the SIR20, then I would think China will go for the Thai grade." General Motors Co is expanding the range of cars it sells in China, a step that could help build on its position in the world's biggest auto market as it tries reclaim the No 1 global carmaker spot from Toyota Motor Corp.
In the United States, auto sales surged by 27 percent in February, exceeding the most bullish analyst forecasts as the lure of discounts from auto makers led by General Motors outweighed concerns about higher oil prices for car shoppers. The most active contract on Tokyo rubber futures, currently August 2011 , was steady at 476.6 yen a kg, having hit an intraday high at 484.8 yen. The contract struck a record around 535 yen in February on persistent worries about supply after bad weather hit producing countries.
"We are optimistic of a price rebound as major producing countries enter the low-production season," Phillip Futures said in a report. It also pointed to February's auto sales figures for the United States. "This could provide bullish sentiment to the rubber prices."
WEEKAHEAD Looking ahead, dealers expected supply to remain tight in the physical market due to wintering in Thailand, Indonesia and Malaysia, which could help cushion falls in Tokyo futures.
"I think this is just a healthy correction that we need before the market continues on a bull run. However, the rise will be much slower now. The correction has taken the steam out of it," said the dealer in Singapore. "China is buying Thai grades but I am sure they may switch back to SIR20 soon."