Asia Rubber-Tyre makers buy as supply fears linger

* Tyre grades traded at $3.10 to $3.28/kg

* Wintering in Thailand, Indonesia and Malaysia

* Tyre makers active, China buys local stocks

By Lewa Pardomuan

SINGAPORE, March 18 (Reuters) - Rubber prices rose as tyre makers bought supplies as the dry winter season in Thailand restricts output, though China remained on the sidelines by drawing down existing stocks, dealers said on Thursday.

Goodyear Tire & Rubber (GT.N: Quote, Profile, Research), Michelin (MICP.PA: Quote, Profile, Research) and Bridegstone Corp (5108.T:Quote, Profile, Research) purchased unspecified quantities of Thai, Indonesian and Malaysian grades late on Wednesday at between $3.10 and $3.28 a kg for nearby shipments, they said.

Cash rubber prices have gone up more than 12 percent since early January and the current level above $3 a kg is the commodity's strongest since 1952. Consumers stepped up purchases on fears the prices could rise further, said dealers.

"Majors are buying now because of the wintering. They can't get anything cheaper. The cost of raw material is high," said a dealer in Thailand's southern city of Hat Yai.

"Bridgestone bought some nearby cargoes at $3.28 last night but some sellers think the price is too low because we are now offering RSS3 at around $3.30," said the dealer, referring to Thai's benchmark grade.

Thailand, the world's largest producer, has revised down this year's rubber output to 3 million tonnes from an earlier estimate of 3.15 million tonnes due to a severe drought. Thailand produced 2.9 million tonnes in 2009. [ID:nSGE62F03N]

Rubber supply has been falling gradually since late February as Thailand is in the dry season, when rubber trees shed their leaves and stop producing latex.

Wintering also hit supplies in Indonesia and Malaysia, where SIR20 changed hands at 141.00, 141.50, 141.75 and 142 U.S. cents per pound and SMR20 was traded at $3.18 a kg in several overnight deals.

For a table on physical prices in Asia, click on [ID:nSGE62H02H]

"Bridgestone, Goodyear and Michelin keep buying rubber. China starts to show some interest but I don't think they are buying much yet," said a dealer in Indonesia's main growing island of Sumatra.

Other dealers said falling rubber stocks in warehouses monitored by the Shanghai Futures Exchange suggested many Chinese buyers still prefer to buy the commodity from the domestic market.

"China is buying but the problem is that they can also buy cheaper cargoes from the warehouses. They will use up the rubber in the warehouses and they've been buying all grades," said the dealer in Hat Yai.

"I heard RSS3 has been quoted at $3.20 there," he added.

Deliverable rubber inventories fell to 106,198 tonnes in the week ended on March 11 from 112,811 tonnes the week before, and stocks on warrant declined 6,680 tonnes to 72,095 tonnes.

(in.reuters.com)