SINGAPORE, Aug 28 (Reuters) – Indonesia’s SIR20 rubber grade was sold to tyre makers at around $1.91 a kg, but tight supplies prompted sellers to hold back stocks despite buying interest for nearby and forward shipments, dealers said on Friday.
Thai RSS3 grade was also traded at $2.115 a kg late on Thursday for October delivery and some quantity of Malaysia’s SMR20 was done at $2.06 a kg. Tyre makers as well as top consumer China were in the market, still hoping for a bargain, dealers said.
“The seller is king. Buyers are looking to buy SIR20 at 88.50 cents for October but no sellers show up,” said a dealer in Indonesia’s main growing island of Sumatra.
“There are plenty of buyers but you won’t find many sellers because we think the price can still go higher. Supply is very tight,” he said.
SIR20 was traded late on Thursday at 86.00 and 86.50 U.S. cents per pound ($1.89 and $1.91 a kg) for October/December with bids at 86.25 cents. African grades were traded this week at prices almost equal to SIR20 but there were no other details.
Prices of the Indonesian grade have gone up nearly 30 percent in the past two months on the back of gains in oil-driven Tokyo rubber futures and tight supplies during the wintering dry season, when trees shed leaves and latex output drops.
Tokyo rubber futures, which set the tone for physical prices, rose almost 3 percent on Friday, extending gains to a two-week high as strong oil prices spurred buying. [RUB/AS]
Rubber output in Indonesia, the world’s second-largest producer after Thailand, may reach 2.1-2.2 million tonnes in 2009, down as much as 19 percent from an earlier forecast of 2.586 million, because of severe drought, industry officials said. [ID:nJAK522927]
The price of tyre grades in Thailand and Malaysia have also gone up on the back of tight supplies due to rains and firm futures market. For a table on physical prices in Asia, click on [ID:nT181359]
“I think this market is very well supported. Thai producers are now selling rubber above 201 cents,” said a dealer in Singapore.
“From time to time we buy African grades but we treat them as raw material. We don’t buy and sell it as a finished product. Basically, the price keeps rising because of there’s a shortage in raw material.”
Dealers said SIR20 remained the cheapest option in Southeast Asia, with tyre makers now keen to buy December cargo.
“I heard some trades to China have been done for SIR20 and SMR20. China should be able to pay because those grades are still a lot cheaper than Thai’s,” said a dealer in Thailand’s southern city of Hat Yai.
Natural rubber output in Thailand, Indonesia and Malaysia dropped 13 percent to 3.02 million tonnes in the first half of this year as fewer trees were tapped, supporting prices, industry sources said. [ID:nSP485484]

Source: Reuters

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