Top tyre maker Bridgestone Corp chased Indonesian rubber this week for nearby delivery, dealers said on Friday, but falling prices kept other sellers out of the market.
Singapore’s tyre grade prices were trading near their lowest in almost five years because of weakness in Tokyo rubber futures, pressure from global oversupply and persistent worries about economic growth in top consumer China.
A decision by Thailand’s military government to suspend a plan to sell 200,000 tonnes of rubber from stocks has done little to support Tokyo’s benchmark prices, which have plunged nearly 30 percent this year.
Tokyo’s most active November contract rose 1.6 yen a kg to settle at 193.0 yen a kg on firmer oil prices, but it posted a second week of decline due to poor demand outlook.
Indonesia’s SIR20 grade was sold to Bridgestone at $1.66 to $1.675 a kg for June delivery, free-on-board (FOB), in a series of overnight deals, down from $1.69 last week. Sellers in top producer Thailand were reluctant to offer rubber.
Thai RSS3 was quoted at $2.02 a kg for nearby delivery, down from as high as $2.15 last week, with no reports of deals. Another grade, STR20, was offered at around $1.70 a kg, down from $1.80 last week.
“We didn’t hear much activity for both grades. There are not many sellers around because the cost to process rubber is much higher than the offer prices,” said a dealer in Thailand.
“The estimated cost of production for STR20 is about $1.80. Chinese buyers are making some inquiries as usual, but the price they are willing to pay is extremely low,” the dealer said.
Malaysia’s SMR20 was quoted at $1.67 to $1.70 a kg, down from up to $1.78 last week. One Kuala Lumpur-based dealer said the grade sold at $1.66 a kg, including freight to China.
Rubber inventory in China has dropped in recent weeks to below 160,000 tonnes, but stocks in the bonded warehouses remain high at around 360,000 tonnes, according to dealers’ estimates. SNR-TOTAL-DW
The high rubber inventory in Qingdao suggests speculators are still using the commodity as collateral for financing.
Global trading houses and banks have been scrambling this week to check on their exposure to a probe on commodity financing by Chinese authorities, as worries grow that any crackdown on the practice could hit trade in the world’s largest buyer of many commodities.