Tyre grade rises after export cuts by top rubber producers

Tyre grade rises after export cuts by top rubber producers

* SIR20 up more than 3 pct, SMR20 rallies on export cuts
* Thai grades untraded, prices firm
* Producers to cut exports by 300,000 T this year

SINGAPORE, Aug 17 - Indonesian rubber changed hands at a price as high as 113.50 U.S. cents a pound ($2.50/kg), up 3.6 percent from earlier this week, after Tokyo futures rallied on the latest plan by top producers to cut exports this year, dealers said on Friday.
Malaysian rubber jumped more than 5 percent, trading as high as $2.64 a kg, from $2.50 late on Tuesday. Thai RSS3 and STR20 were untraded but the grades also firmed after Thailand, Indonesia and Malaysia decided to curb supply to shore up slumping global prices.
"The reaction from the market is very strong, but we still need time to see what the action is. That is more important," said a dealer in Singapore.
"They need to have enough budget to do it," said the dealer, adding that the three producers would have to buy rubber from domestic markets before eventually selling the commodity in the future.
Thailand, Indonesia and Malaysia on Thursday announced the new measures, which will cut supply by up to 450,000 tonnes, which is similar to a move in 2008 to slash exports by more than 900,000 tonnes. The three countries account for 70 percent of global output.

The most active rubber contract on the Tokyo Commodity Exchange, January extended gains on Friday and rallied 6 percent to a high of 224.8 yen a kg on the export cut news and after German Chancellor Angela Merkel gave her support to efforts to resolve the euro crisis.
The contract had plunged to its weakest in nearly three years this week on worries about the health of the global economy, dragging down the price of tyre grades.
Indonesian SIR20 was traded late on Thursday at 111.25, 111.50 to 113.50 U.S. cents a pound for October/November delivery, higher than 109.50 cents transacted late on Tuesday.
There were no reports of deals for Thai RSS3, which was offered at $2.75 a kg on Friday. The grade was traded at $2.60 a kg earlier this week -- well below a lifetime high of $6.40 a kg in February 2011.
"TOCOM has rebounded and then everything goes up. It's typical. This is what the governments want. We have seen this action before and we don't know if this rally will last or not," said a dealer in Kuala Lumpur.
Fears of defaults have gripped the rubber market this week as tyre grades tumbled after price-setting Tokyo futures slipped to their weakest since late 2009.
Though some tyre grades are still being sold to top consumer China, the hefty drop in prices in recent months has caused anxiety among sellers, who were forced to renegotiate contracts with Chinese buyers late last year.
(Source: Reuters)