Asian rubber: tyremakers keep buying despite high prices

BANGKOK  (November 21, 2010) : Major tyremakers are buying Asian rubber for nearby shipment despite high prices, although Chinese consumers are staying on the sidelines, reluctant to pay such rates, dealers said on Tuesday. Major tyremakers, including Bridgestone and Goodyear, are buying Indonesian SIR20 at 191.50 US cents/lb for prompt shipment, they said.
"Most tyremakers have shifted to buy Indonesian grade as it is generally considered the cheapest grade in the region," a Singapore-based trader said. Dealers said most consumers finally accepted the high prices as they realised they would not drop significantly to the levels of about $3.00 per kg seen at the same time last year.
Some traders were still buying Thai rubber, even though it was relatively expensive. "It seems like they realise there's no more cheap rubber," said a dealer in the southern Thai town of Hat Yai, the centre of the country's rubber trade.
Benchmark Thai RSS3 was bought at $4.27 per kg for January shipment, slightly below a record high of $4.40 per kg traded last week. Thai rubber grade as well as other Asian rubber grades changed hands at record levels last week, tracking Tokyo Futures rubber prices (TOCOM) which jumped to a 30-year high.
TOCOM rubber surged to a 30-year peak of 388.9 yen per kg, the highest since 1980, on the back of supply concerns after Thailand, the world's biggest producer, was hit by severe flooding that disrupted tapping and delayed shipments. However, dealers said Chinese tyremakers were staying out of the market, waiting to buy only when prices dropped. "They're waiting to buy when TOCOM prices drop, expecting physical prices to drop as well. But they still buy in dribs and drabs," one dealer said.
WEEK AHEAD The rainy season in Thailand's south is likely to end over the next couple of weeks and traders said they expect no more rain in December and prices should drop gradually.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1126024:asian-rubber-tyremakers-keep-buying-despite-high-prices.html)