SINGAPORE: Bridgestone Corp, the world's largest tyre maker, bought some cargoes on Wednesday for delivery next year, while a drop in China's inventory raised hopes of more purchases from the top consumer, dealers said.
China, which accounts for 35 percent of global consumption, is back in the spotlight as it returns to the physical market after a recent holiday, chasing tyre grades from Southeast Asia.
Inventory of natural and synthetic rubber in China's bonded warehouses in Qingdao slipped to 259,600 tonnes as of October 15, compared with 271,000 at September 29, according to dealers' estimates. A drop in Qingdao stocks is usually seen as a bullish signal.
"Natural rubber inventory is estimated to have fallen by 2,900 tonnes to 126,300 tonnes," said a dealer inSingapore.
"People are now expecting China's demand to exceed 4 million tonnes in 2013 from around 3.8 million tonnes last year."
Inventories in Qingdao's bonded warehouses are not disclosed publicly, but dealers and analysts collect data on quantities from offices in the city. Rubber in Qingdao makes up the bulk of China's inventory.
China has often been a bright spot in the volatile rubber market, where prices of tyre grades fell to multi-year lows mid-year because of concerns over global economic growth.
Global auto sales in September rose 4.5 percent from a year ago, according to industry consultant and analyst LMC Automotive. China was the leading nation in September auto sales, at 1.9 million in sales.
Bridgestone bought Indonesia's SIR20 rubber at 108.25 U.S. cents a pound for February shipment and at 108.50 cents for March and April shipments. ($2.38 a kg and $2.39 a kg)
Late on Tuesday, the grade was traded at 107.50 cents a pound ($2.36 a kg) for December, within sight of last week's levels of 106.50 to 107.75 cents
"Dealers in Singapore bought SIR20 last night and it's possibly for shipment to China," said a dealer inIndonesia's main growing island of Sumatra, referring to Tuesday's deals.
In other grades, Thai RSS3 rubber was traded overnight at $2.62 a kg for November delivery, higher than $2.53 to $2.56 last week. Another Thai grade, STR20, changed hands at $2.49 a kg, versus $2.40 to $2.44 last week.
Malaysia's SMR20 rubber changed hands $2.47 a kg for November, higher than $2.44 last week
Recent gains in benchmark rubber contracts on the Tokyo Commodity Exchange helped lift the price of tyre grades, although trading has been cautious lately as investors hope that frantic talks in Washington to avert a U.S. debt default could lead to a deal before the Oct. 17 deadline.
The Tokyo market sets the tone for physical prices, but the contracts are often influenced by macroeconomics, currencies and equities. The most active March contract hit a high of 272 yen a kg on Tuesday, its strongest since September 27.
WEEK AHEAD
Tyre grade prices could edge up next week due to expectations that China will buy more rubber to replenish stocks. - Reuters