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Rubber advanced for a second day as reduced supply from Thailand, the world’s largest exporter, and a rally in oil prices enhanced the appeal of the commodity used to make tires.
Futures climbed as much as 1.5 percent to 272.2 yen per kilogram ($3,123 a metric ton) in Tokyo. Rain has disrupted tapping, lowering output, the Rubber Research Institute of Thailand said this week. Crude oil futures in New York gained as much as 0.6 percent, increasing the cost of making rival synthetic rubber.
“Concerns over limited supply and crude oil prices standing above $70 a barrel supported the market,” Navarat Kaewpratarn, marketing official at Future Agri Trade Co., said by phone from Bangkok. Buying interest was curbed by the stronger yen, she said.
The December-delivery contract gained 0.8 percent to settle at 270.1 yen on the Tokyo Commodity Exchange. November-delivery rubber on the Shanghai Futures Exchange added 1 percent to settle at 21,735 yuan ($3,207) a ton.
The Tokyo price earlier fell by as much as 0.5 percent on concern that the global economic recovery is faltering. U.S. service industries expanded at a slower pace than expected in June as the Institute for Supply Management’s index of non- manufacturing businesses yesterday fell to a four-month low.
The Japanese currency today traded near a seven-month high against the dollar, reducing the appetite for yen-denominated rubber contracts.
The yen gained versus 15 of its 16 major counterparts before a German report that may show factory orders grew at a slower pace. The currency advanced to 87.68 per dollar from 87.52 yesterday.
Warehouse Stockpiles
Crude rubber stockpiles held at Japanese warehouses fell 8.9 percent to 3,247 metric tons on June 20, according to data from the Rubber Trade Association of Japan.
China’s natural-rubber inventories increased 1,211 tons to 15,982 tons last week, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on July 2. Still, stockpiles have slumped 89 percent this year.
“Low inventories in China and Japan provide hopes they will soon build up their reserves,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.
The benchmark price in Thailand remained unchanged for a fifth day at 112.60 baht ($3.47) a kilogram, according to the Rubber Institute of Thailand, which issues data in the afternoon.
Tight global supplies and strong demand, especially from China, will support prices, the Association of Natural-Rubber- Producing Countries said in its June newsletter. China’s gross imports of natural rubber are projected to climb 5 percent this year to 1.67 million tons, the group said.
The possibility of a “marked improvement” in supply in the short term is limited given aging trees and weather constraints, the association said June 30. Rain in southern Thailand has disrupted plantation work in the major-growing region, according to the institute.
Oil for August delivery on the New York Mercantile Exchange traded at $71.96 a barrel after earlier reaching $72.38.
Source: Bloomberg