Asian rubber: top tyre makers offset rising supply; China buys nearby cargo

China, the world's largest rubber consumer, was in the market this week to buy nearby cargo, while purchases by major tyre makers helped offset worries about rising supply in Southeast Asia, dealers said on Wednesday.
Thai RSS3 and STR20 grade was traded late on Tuesday at up to $4.62 a kg free on board for September/October delivery. Indonesia's tyre grade was a few cents cheaper, but Malaysian rubber changed hands at a premium to RSS3. "China keeps on buying because their stocks are very low. The majors are also in the market," said a dealer in Singapore, referring to tyre makers such as Bridgestone Corp and Goodyear
China, which accounts for 35 percent of global demand, has been rebuilding its inventory since July after turning to its domestic stocks earlier this year because of high physical prices in Southeast Asia. Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 11.7 percent to 24,568 tonnes last week, and customs data showed that demand from China was still firm despite fears about a global economic slowdown.
China imported around 1 million tonnes of natural rubber in the January-July period, up 2.11 percent year-on-year. Carmakers are increasingly relying on growth in high-profile emerging markets like China, Brazil, Russia and India, with the US auto industry far from returning to the heady days of a decade ago when it was selling about 17 million cars a year.
"Some cargoes of STR20 have been traded at $4.61 to $4.62, but there could be other price levels which I can't verify. The buyers are a mixture of China and tyre makers," said a dealer in Thailand's southern city of Hat Yai. "The weather has cleared up and I don't know how long this will last. Tapping has been disrupted by rains."
But dealers said supply was improving in top producer Thailand, with the dry wintering season already over. Raw material was also abundant in second-largest producer Indonesia, but purchases from main consumers could take some pressure off physical prices. Thai RSS3, often seen as a benchmark for physical prices, struck a record at $6.40 a kg in February. "There was a bit of buying by major tyre makers last night. I just came back from a visit of our factories in Thailand and they are full of raw material as it is peak season. It's hard to find any bulls in Thailand," said another dealer in Singapore.
"A shipper in Palembang also told me he has plenty of raw material," said the dealer, referring to a key rubber export port on Indonesia's Sumatra island. Indonesia's SIR20 tyre grade was traded at 204.75, 205.25, 206.00 and 206.25 US cents a pound in overnight deals. Malaysia's SMR20 was sold at $4.65.