August 15, 2014 / 6:15 AM / 3 years ago

Asia Rubber-A few cargoes traded; top buyer China elusive

* SIR20 sold at 75 U.S. cents/lb in thin trade

* SMR20 traded, but quantity small

* SICOM near lowest level in three months, TOCOM down

By Lewa Pardomuan

SINGAPORE, Aug 15 (Reuters) - Small quantities of tyre grades changed hands in Southeast Asia this week, dealers said on Friday, but overall trading was muted as consumers waited for more declines in prices and top buyer China stayed on the sidelines.

The TSR20 contract on Singapore’s SICOM exchange, which covers Thai, Indonesian and Malaysian grades, held near its weakest in three months after benchmark Tokyo futures slipped on weaker oil and concerns over China’s economic growth.

Indonesia’s SIR20 was sold to U.S. buyers and tyre maker Bridgestone Corp at 75 U.S. cents a pound ($1.65 a kg) for September delivery in a series of overnight deals, according to dealers. The grade was sold at 77.00 to 77.25 cents last week.

“China’s asking prices are very low, that’s why it’s so quiet,” said a dealer in Singapore. “Their stocks have fallen, but still, there’s no demand from China.”

Rubber stocks in China’s bonded warehouses in Qingdao have dropped to their lowest since October last year at 262,100 tonnes, suggesting that a probe into a suspected financing scam at the port has curbed demand.

Qingdao port has been at the centre of a major investigation into alleged commodity financing fraud, which has prompted global banks and trading houses to fire off a series of lawsuits over their estimated $900 million exposure.

Metals such as copper and zinc have been widely used for financing, a practice in which a commodity is pledged as collateral for a bank loan. Other commodities such as iron ore, soybeans and rubber have also been pulled into the trade, driving up stockpiles.

In other grades, a small quantity of Malaysian SMR20 was traded at $1.74 a kg late on Thursday, down from $1.78 a kg last week. There were no reports of overnight deals for Thai grades.

The Thai military government plans to shore up falling rubber prices by increasing domestic consumption instead of intervening in the market via a costly buying scheme.

Thailand, the world’s biggest rubber producer and exporter, is forecast to produce 4.0 million tonnes of rubber this year, up from 3.8 million tonnes in 2013.

Editing by Richard Pullin

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