Asian rubber: Thai grades languish; Indonesia reluctant seller

A few cargoes of Indonesian and Malaysian tyre grades changed hands this week at around $4.10 a kg for nearby shipment, while Thailand was keen to sell rubber before prices fell further on worries about demand from major consumers, dealers said on Wednesday.
Top rubber producer Thailand aims to cut output by 3.5 percent this year and will urge Indonesia and Malaysia to follow suit in a bid to prop up prices, which have fallen about a third since hitting a record in February. But Thai dealers said the plan had little impact on the price of Thai grades, which were now offered at a discount to Indonesian grades for the first time in several years. The absence of main rubber China also weighed on Thai prices.
"Basically major tyre producers are lying low because of the economic situation. China is also away because of the holiday, so they are quieter than usual," said a dealer in Thailand's southern city of Hat Yai. "Buyers are probably bidding at close to $4 a kg, while sellers' offers are at $4.05."
Tokyo rubber futures, which set the tone for physical prices, tracked oil higher on Wednesday, but they held near a one-year low around 289 yen a kg hit last month on fears that a slowing global economy could curb demand for tyres. Indonesia's SIR20 was traded at $1.86 a pound ($4.10 a kg) for October/November shipment late on Tuesday - higher than Thai RSS3 and STR20 which stood at $4.05 a kg without freight. Early in September, China purchased some Thai rubber at $4.72, including freight.
RSS3 and STR20 are normally more expensive than SIR20 because of higher processing costs, but a lack of demand and weaker Tokyo futures spurred declines in Thai grades. On the other hand, the dry wintering season in second-largest producer Indonesia led to tight supply. Wintering has started in the southern part of the main growing island of Sumatra, when rubber trees shed their leaves and latex output slows. "No SIR20 is available for the October shipment. I have been trying to buy November today, but the best offer is 187.50 cents," said a dealer in Singapore. Malaysia's SMR20 was traded overnight at $4.15 a kg for October/November shipment.