China’s rubber imports hit record

Tags: Commodities

Increased purchases may support Tokyo futures, the global benchmark price

China’s rubber imports hit record
China’s imports of natural rubber surg­ed to a record in November as traders boos­ted purchases to obtain cheaper financing and to benefit from higher local prices in the world’s biggest consumer.

Overseas shipments of natural rubber and latex rose to 270,000 tonnes, according to data from the general administration of customs in Beijing.

That’s a 42 per cent gain from 190,309 tonnes in October and up 25 per cent from 216,007 in November last year. Imports in the first 11 months of 2013 climbed 8.2 per cent to 2.13 million tonnes, it said on Sunday.

Increased Chinese purchases may support Tokyo futures, the global benchmark price, after a 9.5 per cent drop this year. Shanghai rubber, excluding fees and transportation costs, is on average 22 per cent more expensive than in Tokyo in the past three months, data compiled by Bloomberg show.

“Arbitrage activity is one reason” for higher imports, said Lucy Liu, an analyst at Tower Commodities in Beijing.

“Some trading companies also boosted imports as they use rubber shipments as a form to obtain funding through trade financing.”

China’s foreign-exchange regulator said it will tighten scrutiny of trade financing and that banks should bar companies from being funded based on fabricated transactions. The measures are meant to prevent abnormal foreign-exchange flows, the state administration of foreign exchange said in a statement dated December 6 and posted on its website on Saturday.

China’s record rubber imports follow indications that the government and local tire makers are increasing purchases, according to Zhao Cheng, an analyst at Zhongcai Futures in Chongqing.

The state reserves bureau bought 60,500 tonnes of rubber for government stockpiles on December 5, in addition to an estimated 96,000 tonnes purchased in the past month, said Tong Jingjing, an analyst at the Shanghai unit of Sri Trang Agro-Industry, Thailand’s largest listed rubber exporter.

Chinese tyre makers, currently operating on lean stockpiles of raw materials, may also boost imports to replenish inventories ahead of the Lunar New Year, which begins next month, Zhao said.

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