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Jan. 5 (Bloomberg) — Rubber rose to a 15-month high for a second day as a rally in oil enhanced the appeal of the commodity as an alternative to rival synthetic products and global manufacturing growth boosted optimism demand will gain.
Futures in Tokyo gained for a third day, with the intraday high topping yesterday’s peak that was the highest since September 2008. U.S. manufacturing expanded in December at the fastest pace in more than three years, data showed yesterday. Crude oil traded near a 14-month high as freezing weather and improving global economies bolstered the outlook for fuel demand.
“Improved global economic conditions spurred speculation that demand for rubber will continue to rise,” Rewat Yenchai, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. “Rubber also got a boost from higher crude oil prices.”
Rubber for June delivery rose 1.9 percent to 289.4 yen per kilogram ($3,136 a metric ton) on the Tokyo Commodity Exchange, the highest level since Sept. 25, 2008, before settling at 286.2 yen. Prices more than doubled last year, the best performance since at least 1976, according to Bloomberg data.
Natural-rubber output and exports from Indonesia, India and Vietnam may gain this year, according to December reports from the Association of Natural Rubber Producing Countries.
The projections “signal that demand will increase,” said AGROW Enterprise’s Rewat.
Output in Indonesia, the second-largest producer, may reach 2.68 million tons compared with 2.595 million tons in 2009, according to the association. Exports may rise to 2.3 million tons from 2.1 million tons, it said.
Vietnam may produce 680,000 tons, up 4.6 percent from a year ago, and export all of it, the group said. India may produce 848,000 tons, up from 822,000 in 2009, as shipments increase more than three times to 45,000 tons, the group said.
Chinese Growth
The Institute for Supply Management’s factory index rose to 55.9, the highest level since April 2006, according to the Tempe, Arizona-based group. Readings greater than 50 signal expansion.
Businesses in China, the world’s largest rubber consumer, continued to expand last month as a purchasing managers’ index climbed to 56.1 from 55.7 in November, HSBC Holdings Plc and Markit Economics said yesterday.
Crude oil for February delivery traded at $81.78 a barrel, up 27 cents, on the New York Mercantile Exchange at 2:52 p.m. Singapore time. Yesterday, the contract rose 2.7 percent to $81.51, the highest settlement price since Oct. 9, 2008.
Rubber for May delivery on the Shanghai Futures Exchange added 0.6 percent to 24,730 yuan ($3,622) a ton. Earlier, the contract rose to 24,880 yuan, the highest since August 2008.
Natural-rubber stockpiles monitored by the Shanghai exchange rose 2,855 tons to 144,548 tons, the bourse said on Dec. 31. It was the highest level since November 2004.
“Rising inventories may mean Chinese buying is picking up before the Lunar New Year,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today. China’s Lunar New Year holiday starts Feb. 14 and will last for a week.
Source: Bloomberg