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Buyers from China snapped up Thai rubber this week after prices plunged to multi-year lows, but the one-off deals were not a reflection of an improvement in demand from the world's top consumer, dealers said on Friday.
Some sellers in main producer Thailand may be under pressure to strike deals on fears that global prices could fall further after the military government decided to sell half of the country's 200,000-tonne stockpile, adding to concerns about an already oversupplied market.
In Singapore's SICOM market, the front-month contract tumbled to a five-year low this week. The TSR contract covers Thai STR20, Malaysian SMR20 and Indonesian SIR20 grades.
Thai STR20 for nearby delivery was traded at $1.57 a kg including freight to China in a series of overnight deals, or about $1.55 a kg without freight. Another Thai grade, RSS3, was untraded and quoted at $1.65 a kg FOB.
"We've seen more buying activity from China. I would say this is clearly the case of China buying on dips. I am not sure if they are going to get more rubber," said a dealer in Thailand. "The RSS3 market is still very quiet for a number of days."
Farmers and sellers in second-largest producer Indonesia were equally dismayed by the falling prices. Tokyo rubber futures, which influence SICOM, have fallen more than 30 percent this year, hurt by worries about China's economy and recently by Thailand's decision to sell the stockpile.
Many sellers in Indonesia retreated from the physical market, although there were quotations for the SIR20 grade at $1.49 to $1.50 a kg earlier this week.
"We don't hear any offers today. We can't make money if we have to sell it below $1.62 to $1.63. There's no profit," said a dealer in Indonesia's main growing island of Sumatra.
"I guess you can break even if you sell SIR20 at $1.63 to $1.64."
Malaysian SMR20 rubber changed hands at different prices. One Singapore-based dealer said he sold the grade at $1.61 a kg overnight, while a trader in Kuala Lumpur said SMR20 was traded on Friday morning at $1.59 including freight to China's Qingdao port.
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