China, the world's largest rubber consumer, is chasing tyre grade from Thailand as it slowly rebuilds stocks despite an improvement in physical prices, while major tyre makers are in the market for nearby shipments, dealers said on Wednesday.
China's January-May natural rubber imports rose 6.34 percent to 766,036 tonnes year-on-year, indicating that tyre makers were replenishing stocks after months of relying on domestic inventories. Thai STR20 rubber for nearby shipments was sold to Chinese buyers at $4.58 to $4.59 a kg including freight late on Tuesday. The grade changed hands at $4.32 to $4.33 a kg including freight last week.
"I also heard that STR20 was traded at warehouses in China at the same price. China has been in the market since the beginning of last week but I can't say what the volume is," said a dealer in Thailand's southern city of Hat Yai. The price of Thai RSS3, often seen as the benchmark grade, has gone up more than 2 percent to $4.75 a kg in the past week on renewed supply concerns after rains in top producer Thailand, and also after Tokyo rubber futures rebounded from lows.
RSS3 struck a record above $6 in February. The most active rubber contract on Tokyo Commodity Exchange, currently December rose as high as 385.7 yen a kg, its strongest since mid-June, supported by other commodities markets, which rallied on views a second-quarter slump was overdone.
Indonesia's SIR20 was traded late on Tuesday at 204 to 205 US cents per pound ($4.49 to $4.52 a kg) free-on-board for August shipment, with demand mainly coming from tyre makers. Malaysia's SMR20 changed hands at $4.58 FOB. "China is buying SIR20 but from their own bonded warehouses. The Indonesian boys can only sell far forward, while Chinese buyers want to buy prompt shipment," said a dealer in Singapore.
WEEKAHEAD Dealers expected prices to remain firm next week, but a change in sentiment in the global economy could depress Tokyo rubber futures, which will eventually cut physical rubber prices in Southeast Asia. Global demand for rubber, both natural and synthetic, is forecast to rise to 25.7 million tonnes in 2011, down slightly from an earlier estimate of 26.1 million tonnes in March, but still higher than last's year's consumption, the IRSG said.