Indonesian rubber changed hands below 100 U.S. cents a pound for the first time since the middle of last year as declines in benchmark Tokyo futures and soaring inventory in main consumer China pressured prices, dealers said on Wednesday.

Although tyre grades from Thailand and Malaysia were also traded this week, volumes were small.

Tokyo rubber futures, which set the tone for physical prices, plunged to a 5-month low this week on a rising yen and worries about demand from China.

Rubber stored in bonded warehouses in China's Qingdao port rose by 5 percent to nearly 300,000 tonnes in December, dealers said, raising fears that China could cut purchases in coming months.

Indonesia's SIR20 was traded late on Tuesday at 99.00 and 99.25 U.S. cents a pound ($2.18 and $2.19 a kg) for March/April delivery. Bridgestone Corp was reported to have bought SIR20 at 98.00 cents for March.

Malaysian SMR20 as well as Thai RSS3 and STR20 grades were sold at much higher prices.

"The high inventory in China is affecting sentiment. Supply is basically OK in Thailand, and production is still at its peak," said a dealer in southern Thailand.

"Protests in Bangkok have had no impact on exports yet."

But dealers said things could worsen in top rubber producer Thailand, where protesters trying to unseat the government are camped in central Bangkok. One allied group has threatened to besiege the stock exchange and offices of the Aeronautical Radio of Thailand Ltd.

Thai RSS3 rubber was traded late on Tuesday at $2.35 to $2.36 a kg for March shipment, while another grade was sold at $2.22 to $2.23 a kg. Last week, Bridgestone bought RSS3 at $2.35 per kg for February shipment.

Malaysia's SMR20 was sold by a trading house in Singapore to unspecified buyers at $2.28 a kg. Dealers said it could be a one-off deal as the grade was being offered at $2.15 a kg.

WEEK AHEAD

Dealers expect physical prices to track the fortunes of Tokyo rubber futures, which ended down 9.2 percent in 2013 on renewed concerns about demand. Tokyo rubber futures rose nearly 15 percent in 2012.

Source: http://www.reuters.com