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.