Top consumer China was chasing Thai rubber for delivery soon on worries that gains in Tokyo futures could raise prices in Southeast Asia, while major tyre makers snapped up a few cargoes from Indonesia, dealers said on Wednesday.
Thai STR20 for March-April was traded above $3.80 a kg in a series of overnight deals, but China's purchases were likely to be a knee-jerk reaction to the rallies on the Tokyo Commodity Exchange which were fuelled by optimism over the long-awaited Greek bailout deal. The rubber purchased was from China's bonded warehouses in Qingdao, which makes up the bulk of the country's rubber stocks.
"STR20 was traded at between $3.80 to $3.82 level CIF, but we are not sure how big the quantity is. Sellers basically wanted to sell at $3.85," said a dealer in Thailand. "I think the buying interest is still lacking. The market reacted to Greece's second bailout and the Chinese naturally jumped in and tried to buy some rubber. But their bid is always lower than the price the international traders are willing to sell at." Another Thai grade, RSS3, changed hands at $4.04 to $4.05 a kg, up from $3.98 last week, but there were no details on the buyers.
The most active rubber contract on TOCOM, currently July 2012, hit a high of 337.8 yen a kg, its strongest since late September, extending the previous day's gains. Tokyo futures set the tone for physical prices. Euro zone finance ministers agreed a 130-billion-euro ($172 billion) rescue for Greece on Tuesday to avert an imminent chaotic default after forcing Athens to commit to unpopular cuts and private bondholders to take bigger losses.
"We have seen China in the last few days paying international levels. They are blowing hot and cold," said a dealer in Singapore. "But there's still plenty of nearby rubber and stocks in China. Big rises can result in big drops in prices," said the dealer, referring to the high level of inventory in the warehouses in Qingdao, which is estimated at more than 200,000 tonnes.
While China showed interest in Thai grades, tyre makers such as Bridgestone Corp, the world's largest, Michelin SA and Goodyear Tire & Rubber Co sought Indonesian rubber, dealers said. March SIR20 was traded at 172.25 US cents a pound ($3.79 a kg), April at 172.75 cents, while May cargoes changed hands at 172.50 to 172.75 cents. Malaysia's SMR20 was traded at $3.86 a kg.