Indonesian rubber sold below floor price

Top tyre maker Bridgestone Corp and some trading houses snapped up Indonesian rubber for nearby shipment at low prices as sellers ignored a call by an industry group to not sell the commodity below a prescribed floor, dealers said on Wednesday.

The Indonesian Rubber Association (Gapkindo) had urged members not to sell rubber if the price is below $1.50 a kg, in an attempt to stem a slump in prices. Global benchmark Tokyo futures are hovering near five-year lows on oversupply and concerns about economic growth in main consumer China.

But in a series of overnight deals, SIR20, one of the main grades of rubber used by tyre makers, was traded at between $1.41 and $1.435 a kg for November and December delivery, which is also well below production costs of about $1.60 a kg.

The Indonesian grade is usually the cheapest in Southeast Asia,Reuters reported.

“You can’t tell people not to do business. There’s no sanction,” said a dealer in Jakarta. “If you have stocks, then you’ve got to sell.”

Malaysia’s SMR20 grade changed hands at $1.49 a kg, but there were no reports of deals for Thai STR20 grade, which was being offered at $1.50 to $1.55 a kg. Another Thai grade, RSS3, was offered at $1.60 a kg for November shipment.

Top rubber producers will meet in Malaysia next week to discuss measures to support prices, Thailand’s Agriculture Minister said on Monday, as farmers reel from a slide in the value of the commodity to multi-year lows.