Nov 28 (Reuters) - China's Hainan Rubber Industry Group said it had signed an agreement to buy 208,000 tonnes of rubber from Thailand's Rubber Estate Organisation (REO), which oversees the country's stockpiles.
The firm said the purchases would be made at a "fair market price" but gave no further details in a filing to the Shanghai Stock Exchange dated Nov. 25.
Thailand, the world's biggest rubber producer and exporter, has been trying to reduce its stockpiles, which have been hanging over the market at a time when global prices have been depressed by weak demand.
The Thai government said earlier this month it had offered 200,000 tonnes to Chinese rubber companies.
The government of ousted Prime Minister Yingluck Shinawatra had bought around 200,000 tonnes in a bid to support domestic prices and bolster farmers' incomes.
Traders say the price at which Hainan has agreed to purchase the cargoes could affect spot and futures prices, especially if it had won huge discounts.
"Given the age of the stock and the reported warehouse conditions, Hainan has probably negotiated some quality discounts," said a trader in Singapore.
A Tokyo-based trader said the Thai stockpiles could start rising again.
"As those inventories in Thailand move to China, Thailand may start building up new inventories again as there is no sign of a production cut. Therefore oversupply concerns among investors will likely stay," he said.
Benchmark Japanese rubber prices have fallen nearly 30 percent this year and are trading not far above five-year lows hit last month amid a supply glut deepened by a slowing economy in top consumer China.
Thailand's cabinet passed a 58 billion baht ($1.8 billion) subsidy plan last month to support rubber farmers who, reeling from the slump in prices, have threatened protests against the government. ($1 = 32.7900 baht) (Reporting by Yuka Obayashi in Tokyo and Dominique Patton in Beijing; Editing by Manolo Serapio Jr. and Alan Raybould)