Rubber advanced to the highest level in more than three months on optimism that demand for tires will continue to grow after stockpiles expanded.

The January-delivery contract climbed as much as 2.9 percent to 289.9 yen a kilogram ($3,395 per metric ton) on the Tokyo Commodity Exchange, the highest level since May 6, before trading at 288.1 yen at 11:45 a.m. local time.

“Robust demand amid rising car sales has supported the rubber market,” Varut Rungkhum, an analyst at Agro Wealth Ltd., said today by phone from Bangkok. “Increasing stockpiles also give positive sentiment to the market as they reflect rising orders from tire makers.”

China’s auto sales may rise to 16 million this year, the China Association of Automobile Manufacturers said on Aug. 10, boosting its forecast from a previous estimate of 15 million. The country’s passenger-car sales rose 13.6 percent to 946,200 in July, the association said.

India’s passenger car sales in July surged 38 percent to a record of 158,764 vehicles as economic growth and new models from Ford Motor Co. and Volkswagen AG boosted demand, the Society of Indian Automobile Manufacturers said in a statement on Aug. 9. That’s the highest monthly total the association has recorded, said Vishnu Mathur, director general of the grouping.

January-delivery rubber in Shanghai gained as much as 0.9 percent to 25,545 yuan ($3,763) a ton, before trading at 25,490 a ton.

“The Shanghai market took the lead and Tocom followed,” partly because of physical buying, said Felix Yeo, trading manager at the Singapore unit of Marubeni Corp.

Natural rubber inventories in China expanded for a third week by 1,667 tons to 21,875 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Aug. 13.

Stockpiles held at Japanese warehouses climbed 3.7 percent to 3,396 tons on Aug. 10, according to data from the Rubber Trade Association of Japan.

Source: Bloomberg

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