Chinese rubber imports climbed nearly a quarter in January from the year before, customs data showed, even as inventories held by the world’s biggest buyer of the material continued to swell. Imports rose 22.7 percent year on year to 480,000 tonnes, according to preliminary figures from China’s General Administration of Customs on Wednesday. That was close to 486,440 tonnes in December.
Despite a slowdown in factory activity ahead of Lunar New Year holidays that started in late January, imports remained robust as dealers looked to benefit from low international prices. “Imports started climbing from the fourth quarter of last year. Overseas rubber is quite cheap if you’re importing into bonded zones without import tax,” said Tang Hailun, an analyst at Tianma Futures.
State stockpiling of some 230,000 tonnes of rubber last year also created some room for further imports, added Tang. Inventory in warehouses monitored by the Shanghai Futures Exchange has hit its highest level since 2004, while closely-watched stocks in bonded warehouses in the port of Qingdao are estimated by dealers at around 304,000 tonnes, compared to around 250,000 tonnes in October. The world’s top natural rubber producers are considering joint action to support prices, as tyre grades dip to five-year lows on worries about a slowing economy in top consumer China.
In the meantime, stocks in China may continue to grow, said an analyst in Tokyo who declined to be identified. “Investors still believe rubber prices can’t go up too high,” he said, though he added that the market did appear to be rebounding. “This week, TOCOM may go up to 235 yen ($2.30).” TOCOM rubber futures, which set the tone for physical prices, have rebounded from 18-month lows struck last week on rallies in Japanese equities, but gains are likely to be capped by the high inventory in China.
Tyre grades have been traded at multi-year lows on worries about weakening demand from China. Dealers said the increase in the inventory in China suggests that speculators still use the commodity as collateral for financing. January imports were also spurred by the upcoming halt to tapping in Thailand at the end of this month, said Tang. China imported well over 1 million tonnes of rubber from Thailand in the last three months of 2013. In December, Thai imports came to 184,000 tonnes.
Source: Business Recorder
Published: 13 Feb 2014