China chasing more tyre grade from Thailand

Main rubber consumer China was chasing more tyre grade from Thailand after improving supply prompted sellers to cut prices, but Indonesia was a bit cautious during the dry wintering season, dealers said Wednesday. Wintering has started in the southern part of Indonesia's main growing island of Sumatra, when rubber trees shed their leaves and latex output slows.
An unspecified quantity of SIR20 changed hands at $4.59 kg for October, free on board. "Trading has resumed after the Eid al-Fitr holiday. There were deals last night at 208.50 cents a pound but we didn't see many sellers because of wintering," said a dealer in Sumatra. "Bridgestone bought the rubber," said the dealer, referring to the world's largest tyre maker.
SIR20 had also been offered at 208.75 and 209 US cents a pound, with no deals reported. Trading has picked up in Indonesia after the Muslim Eid al-Fitr celebration early last week, when they were deals at 214 cents a pound. Indonesia, the world's second-largest rubber producer after Thailand, is also the world's most populous Muslim nation.
Thai dealers said China purchased STR20 at $4.70 to $4.72 including freight late on Tuesday, which suggested that some sellers were now willing to strike deals at bargain prices. Thai grades were sold at up to $4.78 CIF last week. On Wednesday, STR20 and another tyre grade RSS3 were also offered at around $4.70 a kg but without freight charges. The RSS3, often considered the benchmark for physical prices, hit a record $6.40 a kg in February.
"Lower production costs now allow Thai sellers to offer STR20 at prices closer to Indonesian and Malaysian grades, but we didn't see any interest from tyre makers such as Bridgestone yet," said a dealer in Thailand's southern city of Hat Yai. A drop in latex prices indicated an improving supply in Thailand, where 60-percent latex was offered at $2,900 a tonne in drums, down from $3,000 last week and $3,250 in early 2011.
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 13.5 percent to 29,818 tonnes last week. China imported around 1 million tonnes of natural rubber in January to July this year, up 2.11 percent. Malaysian SMR20 changed hands at $4.70 and $4.71, free on board.