Asia rubber-tyre makers brake on tumbling prices

Asia rubber-tyre makers brake on tumbling prices

SINGAPORE (Reuters): Tyre makers, the biggest consumers of natural rubber, are back in the market providing some support to the commodity whose prices were drifting towards the 30-year lows seen early this year, traders said on Monday.

Indonesia's rupiah, however, holds the key, they said, as the tyre makers are hesitant buyers amid a global economic slowdown. "Until recently, there were no buyers. Now tyre makers are buying bits and pieces. But I can't imagine they would chase up the prices," said a trader in Singapore.

"It all depends on the rupiah. If the rupiah falls again, I'm not sure where the bottom could be," he said.

Traders said the rupiah's retreat against the dollar last week, coupled with a slump in Tokyo rubber futures, prompted Indonesian suppliers to slash prices to below 23 U.S. cents per pound, or about 50.71 cents per kilo gram (kg), from around 24 cents.

In line with the rupiah's slight recovery ever since, SIR20 was seen at 23 cents per pound for October to December. It was traded at 22.875 cents per pound, or 50.43 cents per kg, FOB Belawan last week.

Traders said tyre makers, now covered for the rest of the year, were bidding at 23.25-23.50 cents for January to March. Indonesian SIR20 again is the cheapest natural rubber available, compared with Thai RSS3 at around 54-55 cents per kg for October to December shipment.

Indonesia's SIR20 hit a 30-year low of below 22 U.S. cents per pound in March and April, helped by the rupiah's slide towards 12,000 to the dollar.

The rupiah was trading at around 9,000 per dollar on Monday.

Traders said Thai prices were also under pressure, with raw material prices skidding to below 22 baht per kg on ample supply.

The price was also weighed down by a market talk that China was paying 55 cents per kg for the 17,000 tons it was to buy in a government-to-government deal, they said. Beijing paid 57.50 cents per kilo for the 17,000 tons shipped in August.

Asked whether China was interested in buying more rubber, the trader in Singapore said. "We hear China doesn't need RSS3 for the foreseeable future. It may buy more SIR20 if prices come down," he said.