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July 30 (Bloomberg) — Rubber rallied after data showed the economic slump eased in the U.S. and industrial output expanded in Japan, raising speculation raw material demand will recover.
Futures in Tokyo climbed as much as 1.2 percent, extending this month’s gain to 13 percent. The Federal Reserve said most of its 12 regional banks detected a slower pace of economic decline in June and July, adding to signs the U.S. recession is closer to an end. Japanese manufacturers increased production for a fourth month in June, capping the fastest quarterly output expansion in more than half a century.
“The market is supported by expectation for demand recovery,” Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.
Rubber for January delivery added 0.8 percent to 183.4 yen a kilogram ($1,932 a metric ton) on the Tokyo Commodity Exchange at 11:23 a.m. local time.
Japan’s industrial production expanded 2.4 percent in June from May, the Trade Ministry said today in Tokyo. Second-quarter output gained 8.3 percent from the first quarter, the steepest rise since 1953. Companies surveyed by the ministry planned to continue increases in July and August as well.
Leaner inventories and more than $2 trillion in stimulus spending by governments worldwide stabilized global demand, supporting exporters including Mitsubishi Motors Corp. Even with the month-on-month gains, companies are producing 23.4 percent fewer goods than last year, putting pressure on them to forgo investment and cut workers to maintain profits.
Rubber futures advanced 13 percent this month and are headed for the best monthly gain since October 2007 as a rally in global equities boosted optimism for an economic recovery and as rubber exporters curbed shipments.
Supply Cuts
Thailand, Indonesia and Malaysia, the largest rubber producers, may deepen a planned supply reduction this year as the recession curbs consumption, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said July 26.
The three producing countries will cut shipments by as much as 48,000 tons a month in the second half, Latiff said July 15. The trio reduced 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.
Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, dropped 1 percent to 17,630 yuan ($2,580) a ton at 10:41 a.m. local time.
Source: Bloomberg