Asia Rubber-China shops around after holiday, may rebuild stockpiles

Main rubber consumer China snapped up tyre grades for nearby shipment as traders there returned to the physical market after a holiday, heightening speculation the country will stockpile the commodity again, dealers said on Wednesday.

China, which accounts for 35 percent of global consumption, announced last year it would buy up to 200,000 tonnes of rubber from the domestic market to support prices but dealers said only a fraction was purchased by the end of 2012.

Some dealers speculatedChinawould aim to stockpile that same amount of rubber this year, probably buying about 50,000 tonnes from the overseas market and the rest locally.China's rubber output may rise 7.5 percent to 855,000 tonnes in 2013, according to the Association of Natural Rubber Producing Countries.

"We've seen buyers fromSingaporeandChinaaround.China's stockpiling plan will stir up the market," said a dealer inThailand, the world's largest producer.

Chinamainly buys natural rubber fromThailand,Indonesia,MalaysiaandVietnam. Imports rose 8.48 percent to 1,486,919 tonnes in January to August this year compared with the same period in 2012.

Thai RSS3 rubber was traded late on Tuesday at $2.53 to $2.56 akg for November delivery and at $2.56 to $2.59 for December, higher than $2.49 last week.

Another Thai grade, STR20, was sold at $2.40 to $2.44 akg versus $2.37-$2.45 last week.

"Chinakeeps on buying this week, but we don't know about the quantity of rubber to be used for stockpiling," said a dealer inSingapore. "Normally,Chinawould be buying rubber from the domestic market for stockpiling purposes."

Chinese buyers have increased their presence in the physical market in recent weeks, sparking speculation the government may announce the stockpiling plan soon.Chinais also seen replenishing stocks following a drop in the inventory inQingdao.

However, benchmarkTokyorubber futures tracked the Nikkei share index lower on Wednesday, having risen more than 3 percent in the previous session on speculation thatChinawould buy the commodity. TheTokyomarket, which sets the tone for tyre-grade prices, often tracks movements in equities and currencies.

Indonesia's SIR20 rubber changed hands at 106.50 to 107.50 U.S. cents a pound ($2.34 to $2.41 akg) for November shipment, higher than last week's offer prices of 104.25 to 104.75 U.S. cents.

The buyers were trading houses inSingapore, which usually ship rubber toChina.

Malaysia's SMR20 was traded at $2.44 akg, higher than last week's offer prices of $2.38 to $2.40.

WEEK AHEAD

Tyregrade prices could rise further next week asChinareplenishes stocks after the holiday.