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Sept. 10 (Bloomberg) — Rubber advanced for a second day to the highest level in 11 months as a rally in oil boosted the cost of making rival synthetic products used in car tires.
Futures in Tokyo gained as much as 0.7 percent to 218.4 yen a kilogram ($2,371 a metric ton), the highest level since Oct. 7. Crude oil climbed as the falling dollar spurred investors to buy commodities as an inflation hedge, and an industry report showed a decline in U.S. inventories.
“Rising oil gave the biggest support to the price of rubber futures,” Hisaaki Tasaka, analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone.
February-delivery rubber added 0.5 percent to settle at 218.1 yen a kilogram on the Tokyo Commodity Exchange.
Crude oil also gained after the Organization of Petroleum Exporting Countries agreed to maintain production quotas at 24.845 million barrels a day. The American Petroleum Institute reported U.S. stockpiles declined 7.22 million barrels, the biggest drop since Sept. 5, 2008.
Gains in rubber futures were limited amid speculation the yen may extend gains against the dollar, Tasaka said. Japan’s currency rose to 91.61 per dollar yesterday, the highest since Feb. 17. A strong yen is negative for the price of futures as rubber trades globally in dollars.
The yen may strengthen against the dollar as it is replaced as the favored currency for so-called carry trades, Royal Bank of Scotland Group Plc said in a report yesterday.
RBS Forecasts
RBS will probably revise its year-end yen forecasts “in the order of 88 versus the dollar and 122 versus the euro” when it updates its projections this week, the report said. Japan’s currency traded at 92.13 per dollar as of 4:02 p.m. in Tokyo.
Rubber futures gained 60 percent this year as rising car sales in China, the world’s largest consumer, raised optimism demand from tire makers will increase.
China’s passenger-car sales rose a record 90 percent last month, according to the China Association of Automobile Manufacturers. A 4 trillion yuan ($586 billion) stimulus plan has shielded the country from the global recession, helping car sales jump at least 45 percent for four months in a row.
January-delivery rubber on the Shanghai Futures Exchange rose 0.4 percent to 18,670 yuan ($2,734) a ton.
Source: Bloomberg