Asia Rubber-Tyre grades traded for June delivery; China elusive

* STR20,SMR20,SIR20 traded below $5/kg

* Inventories in China's bonded warehouses weigh

* RSS3 seeks buyers

By Lewa Pardomuan

SINGAPORE, May 16 (Reuters) - Rubber in Asia changed hands at below $5 a kg for nearby delivery, with buying interest coming from major tyre makers, but main consumer China was elusive because of high inventories in bonded warehouses, dealers said on Monday.

STR20 for June/July shipment was traded at $4.50 to $4.55 a kg late on Friday, but buyers turned their back on another Thai grade, RSS3, which was offered at around $5. A few cargoes of Indonesian and Malaysian tyre grades also changed hands late last week.

Physical prices have dropped more than 20 percent since hitting a lifetime high at $6.40 in February, driven by futures selling on the Tokyo Commodity Exchange and worries about a drop in demand from China as it tightens monetary policy.

"China is not around because of the stocks, and also because the prices in bonded warehouses are lower than the levels we offer here," said a dealer in Singapore, who mainly sells Indonesiaand Malaysian grades.

"Actually we are not keen to sell at this low price. But some Thais want to sell because they need the contracts to get bank loans," he added.

China needs to raise interest rates further to rein in stubbornly high inflation, and the economy will retain much of its momentum this year despite policy tightening, Li Daokui, an adviser to the People's Bank of China, said on Monday. [ID:nLDE74F02S]

Dealers said rubber kept at warehouses in China was offered at below $4.50 a kg, attracting interest from domestic tyre makers. Indonesian SIR20 grade was traded last week at $4.50 a for June, and Malaysian SMR20 at $4.56 a kg.

Rubber stocks in China's bonded warehouse in Qingdao were estimated at as much as 200,000 tonnes, an Aisling Commodity Fund executive told Reuters last week. [ID:nL3E7GC0F5]

Inventories in the Qingdao bonded area are not disclosed to the public, but make up the bulk of China's rubber stocks.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 19.5 percent to 14,161 tonnes last week. [ID:nEMS011045]

"I would think rubber stocks in Qindao are between 150,000 to 170,000 tonnes, and that's regarded as considerably sufficient. We also heard tyre stocks are high too," said a dealer in Thailand's southern city of Hat Yai.

"Major tyre makers were in the market to buy STR20 but there was no interest for RSS3. The weather has been hot here, but there are also occasional heavy rains."

Thailand should produce 3.46 million tonnes of rubber this year, down one percent from a January forecast due to heavy floods, the chief of an industry body in the world's biggest rubber producer and exporter said. [ID:nL3E7FJ0QW]

WEEK AHEAD

Dealers expected tyre makers such as Bridgestone to buy more rubber next week whenever there was a drop in prices, but China was likely to turn to its own inventory.

"We have seen demand from trading houses in Singapore and also Bridgestone, but it's hard to get interest from China," said a dealer in Indonesia's main growing island of Sumatra.

(Reporting by Lewa Pardomuan; Editing by Ed Lane)

(Source: http://www.reuters.com/article/2011/05/16/rubber-physic-als-idUSL4E7GG12020110516)