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Rubber advanced to a one-month high after data showed stockpiles in China declined to the lowest level in seven years, sparking optimism the biggest buyer may soon replenish inventories.
Futures in Tokyo climbed to 288.6 yen per kilogram ($3,231 a metric ton), matching a high reached on May 28. The price gained 3.8 percent last week, booking the second weekly increase, as rainfall disrupted production in Thailand, the world’s biggest producer and exporter.
Natural rubber stockpiles monitored by the Shanghai Futures Exchange dropped 1,670 tons to 14,771 tons, the bourse said on June 25. It was the lowest level since January 2003, according to the Bloomberg data.
“Chinese buyers may have withheld rubber purchases amid speculation that the raw material prices would drop on a seasonal increase in production,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “As rubber prices have stayed high,” they may step up buying to replenish inventories, he said.
Rubber for December delivery settled at 283.80 yen from its settlement of 278.6 yen on June 25. It has become the most- actively traded contract on the Tokyo Commodity Exchange after its listing on June 25.
November-delivery rubber on the Shanghai Futures Exchange added 1.7 percent to settle at 22,265 yuan ($3,278) a ton. Earlier, it rose to 22,420 yuan, the highest level since June 2.
China Demand
China, the largest auto market, is the biggest consumer 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.
In Thailand, “heavy rains in southern provinces have reduced tapping, supporting prices,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.
The auctioned price of ribbed smoked sheet gained 0.6 percent to 111.91 baht ($3.46) a kilogram as supply is limited, the Rubber Institute of Thailand said on its website today.
The benchmark price in Thailand remained unchanged at 118.85 baht ($3.67) a kilogram, according to the institute. A decline in rainfalls in southern Thailand will increase the latex volume, it said.
Rubber prices may climb 26 percent next year as supplies lag behind demand, according to Royal Bank of Scotland Asia Securities (Singapore) Pte.
Rubber may average $4,500 a ton next year, up from $3,580 a ton year-to-date, as “heavy rainfall in southern Thailand has disrupted supply” and “inventory levels in China are worse than we expected,” Nirgunan Tiruchelvam, a commodities analyst at the bank, said in an e-mailed report last week.
Source: Bloomberg