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July 17 (Bloomberg) — Rubber jumped to a five-week high on speculation reduced supplies and a recovery in the world economy will increase demand for the commodity.
Rubber futures in Tokyo have gained 8.3 percent this week, the biggest advance since March 27, on plans by major producers to extend export reductions in the second half to bolster prices. June industrial production in China, the world’s largest car market and rubber consumer, was 10.7 percent higher than a year earlier, the government statistics bureau said today.
“Fundamentally, rubber futures will remain firm,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. “Supplies have been limited, while car production has gradually increased.”
Natural rubber for December delivery rose as much as 3.1 percent to 171.2 yen a kilogram ($1,826 a metric ton) on the Tokyo Commodity Exchange, the highest since June 11. It closed at 171.1 yen.
“We are seeing a bit of position-squaring ahead of the long weekend,” Kikukawa said. The market is closed on July 20 for Japan’s Marine Day public holiday.
Thailand, Indonesia and Malaysia will reduce shipments by as much as 48,000 tons a month in the second half, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said July 15. The trio cut exports by 540,000 tons in the first five months of the year, more than the 414,000 ton reduction planned for the first-half, he said.
Supplies Tighten
Rubber, used to make car tires, has gained 26 percent this year as supplies tightened and global car sales started a slow recovery. New-car registrations in Europe rose 2.4 percent to 1.46 million vehicles in June, the first gain since April 2008, the Brussels-based European Automobile Manufacturers’ Association said July 15.
China’s sales of cars and other passenger vehicles surged 48 percent to 872,900 last month, the China Association of Automobile Manufacturers said July 9.
Prices also gained today after shippers in Thailand raised their offers for RSS-3 grade rubber for August delivery to $1.71 a kilogram yesterday from $1.67 on July 15, according to Takaki Shigemoto, an analyst at broker Okachi & Co. in Tokyo.
Rubber for November delivery on the Shanghai Futures Exchange, the most-active contract, rose 2.4 percent from the previous day’s close to end at 16,465 yuan ($2,410) a ton.
Source: Bloomberg.com