Asian physical rubber underpressure

Singapore  (may 08, 2011) : a few cargoes of tyre grade rubber changed hands for nearby shipments, but the physical market was under pressure from a lack of demand from main consumer china despite falling inventories there, dealers said on wednesday. rubber inventories monitored by the shanghai futures exchange stood at 5,065 tonnes as of last week, the lowest in at least two years.
prices of tyre grade have tumbled since hitting a record on february after a devastating earthquake in japan hit auto production, and china tightened the economy - triggering heavy selling in tokyo and shanghai rubber futures. thai rss3, often seen as benchmark in the physical market, was traded late on tuesday at $5.30 a kg for june shipment, far below a record of $6.40 quoted in february. indonesia and malaysian grades changed hands below $5 a kg.
"china consumers realise the market is being kept down and are just buying hand to mouth," said a dealer in singapore, who mainly trades indonesian grade. the most active contract on shanghai rubber futures, september 2011 ended at 31,145 yuan a tonne on wednesday, down from tuesday's closing of 31,760 yuan on worries about more measures from china to fight inflation. tokyo rubber futures, which set the tone for physical prices, were closed for a holiday.
the official china securities journal cited central bank vice governor yi gang as saying that china would keep mopping up excess cash in the economy by raising cash reserve requirements for banks, adding that measures taken dampen prices would show results in the second half of the year. "the physical consumption has been falling month on month china's economic growth in the second quarter will definitely slow down," said guo cheng, an analyst with yong'an futures.
dealers said tyre makers such as bridgestone were still in the market, while china's lack of interest showed that local tyre makers turned to rely on inventories in qingdao bonded area, which are not disclosed to the public, but make up the bulk of the country's rubber stocks.

(Source: http://www.brecorder.com/news/agriculture-and-allied/world/1186308:asian-physical-rubber-underpressure.html?hl=rubber)