Asia Rubber-China devours Thai, Malaysian grades on cheaper freight


* RSS3 traded at $3.35 to $3.36/kg for Feb

* SIR20 January sold as high as 155 cents/lb

* China buys Thai, Malaysian grades

By Lewa Pardomuan

SINGAPORE, Dec 21 (Reuters) - China, the world's largest rubber consumer, was chasing more cargo from Thailand and Malaysia because of cheaper freight rates, while major tyre makers turned to the Indonesian grade to replenish stocks, dealers said on Wednesday.

Year-end demand was steady even though physical prices had gained due to a recovery on the Tokyo Commodity Exchange, where the most active rubber contract, May 2012, tracked oil and equities higher on hopes for a lasting solution to the debt crisis in Europe.

Thai RSS3 grade changed hands at $3.35 to $3.36 a kg for February shipments in overnight deals, while another Thai grade, STR20, was traded at $3.36 a kg. Last week, the two grades were sold for as little as $3.36 a kg.

There were also a series of deals late on Tuesday for Indonesia's SIR20 tyre and Malaysia's SMR20 at above $3 a kg.

"China is hopeless, plus STR20 and SMR20 are on par or below SIR20," said a dealer in Singapore, who sells the Indonesian grade. "That means on a CIF basis, STR20 and SMR20 will be cheaper as the freight from Indonesia to China is a premium."

The price of SIR20, which used to be the cheapest grade in Southeast Asia, started to surpass Thai rubber in early October after a dry wintering season in the southern part of the main growing island of Sumatra curbed the flow of latex.

The northern part of Sumatra is now in the rainy season, which also slows the flow of latex.

Indonesia's commodity-rich Sumatra and Kalimantan regions are among areas at high risk of flooding this month, the state weather agency said, adding to the region's struggles with high waters this year.

SIR20 was traded at 153.75 U.S. cents to 155 cents a pound ($3.39 to $3.41 a kg) for January shipment, while February cargo changed hands at 154 a pound, with Bridgestone Corp and Goodyear among the buyers, said dealers.

But China was absent because it was cheaper to ship rubber to the country's bonded warehouse in Qindao from Thailand and Malaysia.

Freight rates to Qindao from main ports in Indonesia were quoted by dealers at $400 to $500 per container, versus $300 from Bangkok or $110 from Penang in Malaysia.

"China is not around yet, but we do see buying interest from Bridgestone or Goodyear," said a dealer in Sumatra.

China imported 1.66 million tonnes of natural rubber from January to October, up 10.8 percent. It mainly buys rubber from Thailand, Indonesia, Malaysia and Vietnam.

Malaysia's SMR20 for Februay was traded at $3.35 a kg.


Demand from China was expected to be steady next week because local tyre makers typically stock up ahead of the Lunar New Year, which falls in January next year. Other consumers could also chase rubber before prices rose further.

Global demand for rubber, both natural and synthetic, is forecast to reach 27.2 million tonnes in 2012 versus 25.7 million tonnes in 2011, the International Rubber Study Group said on Tuesday. (Editing by Clarence Fernandez)



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