China buys many rubber cargoes

Tyre makers from China purchased several rubber cargoes this week following a drop in inventories in Qingdao port, while some Indonesian exporters were reluctant to offer the commodity as prices held near five-year lows, dealers said on Thursday. However, the slight pick-up in demand from top consumer China was not really taken as a sign of recovery in a market burdened by oversupply and confusion surrounding the sale of 100,000 tonnes of Thai rubber from state stockpiles. 

Thai STR20 for November was sold to Chinese buyers at $1.55 to $1.60 per kg including freight in a series of overnight deals, within sight of last week's traded price of $1.57 CIF. Another Thai grade, RSS3, was traded at $1.65 to $1.70 a kg on a free-on-board basis. "Stocks in the bonded warehouses in Qingdao have dropped to a new low this year, so we are seeing more consumers coming into the market," said a dealer in Singapore. 

"They have requested an early shipment because the price is attractive. We have barely shipped rubber to China in the last six months," said the dealer, adding he had sold Malaysian SMR20 at $1.635 to China without freight. A Kuala Lumpur-based dealer said SMR20 was sold to unspecified buyers at $1.585 a kg FOB overnight. Inventories in the bonded warehouses in Qingdao were estimated to have fallen to 192,200 tonnes, according to dealers, from 362,200 tonnes in mid-May and around 341,000 tonnes in late June last year. 

Stocks at the port have been depleted due to reduced demand for the commodity as collateral for loans because of a probe into alleged fraud. "China is still cautious, especially since the release of the latest economic data," said a dealer in Thailand. "I don't know what they plan to do later in terms of purchases." Foreign direct investment in China in August fell to a low not seen in at least 2-1/2 years, the Commerce Ministry said on Tuesday, underscoring the growth challenges facing the world's second-biggest economy.