Major tyre makers snapped up Indonesian rubber for nearby shipment while top consumer China made a brief return to the physical market this week, buying some quantity of Thai tyre grade, dealers said on Friday. But China's overall demand was slow due to high inventory in the bonded warehouses in Qingdao, estimated by dealers at as high as 250,000 tonnes.
Inventory in Qingdao is not disclosed to the public, but makes up the bulk of China's stocks. "China is still very quiet as they are just eating away at their stockpile," said a dealer in Singapore, who mainly trades Indonesian rubber. Indonesia's SIR20 tyre grade changed hands late on Thursday at 169.00 to 169.75 US cents a pound ($3.72 to $3.74 a kg) for March-May delivery, down from 171 cents to 173 cents a pound last week.
Trading houses bought the tyre grade, but several cargoes were also sold to Bridgestone Corp, the world's largest tyre maker, and French tyremaker Michelin SA, dealers said. Although China bought a few cargoes of Thai STR20 at $3.78 in overnight deals, dealers said the purchase could be a one-off event because tyre grade kept in Qingdao was around 6 cents cheaper. Another grade, RSS3, was traded at $3.98 a kg, but there were no details on the buyers. Malaysia's SMR20 was sold at $3.81 a kg.
The physical market shrugged off news that a 15 billion baht ($485 million) intervention plan by Thailand to shore up prices has been delayed by another few weeks by the legislative process and may now start in March. "Some Chinese buyers came in to buy STR20 for nearby shipment. They were buying on dips," said a dealer in Thailand. Prices of RSS3, considered the benchmark grade in Southeast Asia, have risen more than 20 percent in the past month after main producer Thailand approved the plan to buy rubber from farmers to support domestic prices.
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