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Hainan ..... keen on deal with Thai government.

China's Hainan in talks to buy Thai rubber

BEIJING, December 9, 2014

China's Hainan Rubber Industry Group is in talks with the Thai government about buying a further 200,000 tonnes of rubber, a source with knowledge of the matter said on Tuesday, but no deal has been done yet.

Thailand's deputy agriculture minister, Amnuay Patisse, told Reuters on Monday that the rubber had already been sold, the second large sale to the Chinese group in as many months.

Thailand, the world's top rubber exporter, was struggling to ship bulging stockpiles of the commodity until Hainan stepped in to snap up 208,000 tonnes in November.

"China bought 200,000 tonnes more in addition to the old deal," Amnuay said. A source at Thailand's Agriculture Ministry, who declined to be named, added that Hainan had paid "slightly above market prices" and the rubber would be delivered over the next 12 months.

However, the Chinese source said the deal was still under discussion. The main reason they were talking about another deal was that "the Chinese and Thailand governments wish to stabilise rubber prices", the source added.

Edging closer to a record low reached in September, Shanghai rubber futures SNRcv1 fell by 560 yuan, or 4.5 percent, on Tuesday to 11,945 yuan per tonne, hurt by a drop in crude oil prices to five-year lows but also under pressure from the reported Hainan deal.

Benchmark futures on the Japanese TOCOM market hit a five-year low in October.

"It's hard to understand why they would do this. It's a very big amount and they have just bought 200,000 tonnes, which hasn't yet been consumed," said Quan Shuwen, senior analyst at Dongwu Futures.

"This will put a lot of pressure on domestic supply," she added.

China accounts for about 35 per cent of the world's rubber consumption but slowing economic growth has curbed demand at a time of excess supply in top producer countries Thailand, Malaysia and Indonesia.

Hainan Rubber is owned by Hainan State Farms, which has expanded its plantations from the tropical Hainan island into Yunnan province in recent years as well as Africa. It acquired top Singapore-based trading firm R1 International in 2012.

China's government may buy a large amount of rubber from Hainan Rubber for domestic stockpiles in an auction later on Tuesday to compensate the firm for the recent Thai purchase, said a trade source who declined to be identified.-Reuters




Tags: China | Hainan |

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