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Rubber climbed for a second day to one-week high on optimism that Japan and China will soon build up stockpiles amid concerns that rainfall in southern Thailand will further cut scarce supplies from the largest exporter.
Futures in Tokyo advanced as much as 3 percent to 286.2 yen per kilogram ($3,185 a metric ton), the highest level since June 16, headed for a second weekly gain on optimism that the European debt crisis may not substantially weaken demand for the commodity used to make tires and gloves.
“Tokyo doesn’t have many stocks in the warehouse, neither does Shanghai,” said Kazunori Kokubo, a manager at Yutaka Shoji Ltd. Speculation that the two countries will soon accumulate rubber is helping to drive gains, he said.
Crude rubber stockpiles held at Japanese warehouses fell 12.1 percent to 3,563 metric tons on June 10, according to data released today from the Rubber Trade Association of Japan.
China’s natural rubber inventories fell 1,440 tons to 16,441 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said June 18. It’s the lowest level since 2003, according to data compiled by Bloomberg.
Rubber for November-delivery gained 1.1 percent to settle at 280.9 yen per kilogram on the Tokyo Commodity Exchange. The November-delivery contract on the Shanghai Futures Exchange rose 1.3 percent to settle at 21,820 yuan ($3,202) a ton.
China, the world’s largest auto market, is the biggest user of natural rubber. The nation may increase gross imports of the raw material to 1.68 million tons this year, from 1.59 million in 2009, according to a May report from the Association of Natural Rubber Producing Countries.
Thai Supplies
The monsoon covering the Andaman Sea and the Gulf of Thailand is causing heavy rains in many parts of the country, including southern provinces, the Meteorological Department said on its website today. Thailand’s southern provinces account for 68 percent of the nation’s total rubber plantation area.
“Heavy rains sparked worries that the currently low level of supplies will subside further,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok.
“The nearby contract rally reflected a tight supply in the physical market. Its gains spilled over to other contracts,” Varut said.
The contract for June delivery, which expired today, gained as much as 2.5 percent to 372.90 yen per kilogram before settling at 372 yen.
The benchmark price in Thailand advanced 0.9 percent to 117.35 baht ($3.62) a kilo as demand remains strong and rainfall limits tapping, reducing latex production, the Rubber Institute of Thailand said on its website today.
Global rubber output may total 9.7 million to 10.2 million tons this year as drought and heavy rainfall in key producing countries including Thailand and Indonesia damage supply, Stephen Evans, the secretary-general of the International Rubber Study Group, said in an interview last week. That compares with the group’s forecast range of 10.1 million to 10.6 million tons on March 17.
Demand will probably increase by 4.4 percent this year to 9.8 million tons, based on the assumption that the economic recovery will slow, Evans said. The group forecast in March that demand would be 10.2 million tons.
Source: Bloomberg