Asian rubber: tyre makers buy on dips

Singapore  (january 30, 2011) : a drop in rubber prices from record highs spurred buying from tyre makers outside of main consumer china which turned to domestic inventories, dealers said on wednesday. indonesia's sir20 grade changed hands late on tuesday at 251.50 us cents a pound ($5.54 a kg) for march, down slightly from an all time high at 252 cents quoted on monday, when rubber futures in tokyo and shanghai hit a record on persistent supply concerns.
there were no reports of deals for thai and malaysian grades, suggesting that main consumers, including indian tyre makers, are waiting for more correction in prices. "i am sure potential buyers will be on the sidelines in the next few days," said a dealer in singapore. "of course processors like us want to sell, but if buyers don't want to buy, then you can't do anything."
rubber prices in southeast asia have struck a series of record high since october after unusually heavy rains blamed on the la nina weather phenomenon curbed supply in thailand, indonesia and malaysia. thai rss3 was offered near record high at $5.75 a kg, while malaysian smr20 was quoted at between $5.50 and $5.55 a kg.
in the futures market, the newly listed july rubber contract on the tokyo commodity exchange was at 453.6 yen a kg after opening at 460.2 yen, tracking broad weakness in commodities markets. the previous benchmark for june delivery fell 19.5 yen to 457.1 yen. it hit a record high of 484.9 yen on monday.
sixth month tokyo rubber will fall to 397.7 yen per kg over the next four weeks, according to wang tao, who is a reuters market analyst for commodities and energy technicals. a wave (iv) correction has started after a wave (iii) has peaked at 484.90 yen, based on its wave pattern and a fibonacci retracement analysis on the rise from 256.70 yen to 484.90 yen.
dealers said rains persisted in parts of indonesia, which could help cushion the fall in futures prices. supply in main producer thailand would even get tighter in february, when the dry season starts and rubber trees produce less latex. "we struck some deals last night, then buyers disappeared. i think there is still a chance for the price to go up again," said a dealer in indonesia's main growing island of sumatra.
"but china and india are in their long slumber," he added. dealers said tyre makers in china turned to warehouses in shanghai because rubber kept there was usually a few cents lower than the prices quoted by sellers in southeast asia. rubber inventories in warehouses monitored by the shanghai futures exchange fell 4.6 percent to 65,532 tonnes from a week earlier, the exchange said on friday.
weekahead a rebound in tokyo and shanghai futures could eventually trigger buying from china on fears that prices could rise further, given worries about supply.
"demand from china is dead, and india is also dead," said another dealer in singapore. "however, the majors are buying every day. bridgestone, goodyear and conti are still buying march shipment." french-listed natural rubber group siph expects rubber demand to remain strong in 2011, partly due to healthy appetite in emerging countries such as china and india, its deputy chief executive told reuters.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1149983:asian-rubber-tyre-makers-buy-on-dips.html?hl=rubber)