Rubber advanced to a five-week high as stockpiles in Japan declined to the lowest level in at least nine years and stronger car sales in China and Japan raised optimism that demand for the commodity may increase.

Futures in Tokyo climbed as much as 2.7 percent to the highest level since June 29. The price extended last month’s 1.3 percent gain, the first increase in four months.

Rubber stockpiles monitored by the Tokyo Commodity Exchange fell 22 percent to 1,042 metric tons as of July 20, data from the bourse showed. It was the lowest level since at least 2001, exchange spokesman Norikazu Takei said today by phone.

“Tight supplies spurred a short-covering rally,” Kazuhiko Saito, analyst at Tokyo-based broker Fujitomi Co., said today by phone. Speculators with short, or sell, positions in the nearby contract must buy them back by its expiry, unless they can deliver the raw material.

January-delivery rubber rose as much as 7.3 yen to 280 yen per kilogram ($3,231 a ton) on the Tokyo exchange before settling at 279.5 yen. August-delivery rubber gained as much as 2.3 percent to settle at 310.8 yen. Last month, the July contract expired at 400 yen with physical delivery of 8 lots, or 40 tons, Takei said.

“Robust car sales in Japan and China provided optimism demand for rubber will continue to grow, boosting rubber prices today,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

Car Sales

Sales of cars, trucks and buses, excluding minicars, rose 15 percent to 333,403 vehicles in July from a year earlier, the Japan Automobile Dealers Association said in a statement today.

China’s passenger-car sales in July rose 15.4 percent from a year earlier to 822,300 units, the China Automotive Technology & Research Center said today. The nation’s automobile sales rose 17 percent to 1.06 million units, according to the center.

Rubber futures also advanced as a rally in Asian stocks boosted investor confidence in the economic recovery, Saito at Fujitomi said. The MSCI Asia Pacific Index climbed 1.2 percent to 120.61 as companies from Honda Motor Co. to Hyundai Mobis Co. reported higher earnings or forecasts.

The yen weakened versus all of its 16 major counterparts after Australia’s manufacturing growth accelerated in July and South Korea’s exports increased for a ninth month, raising the appeal of yen-denominated contracts.

“Growth in Asian economies looks solid,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This is supportive of equities and risk-taking appetite.”

January-delivery rubber on the Shanghai Futures Exchange surged 2.1 percent to 24,460 yuan ($3,611) a ton.

Prices in Thailand’s cash market advanced due to Chinese and Japanese automaker demand for tires, the Rubber Research Institute of Thailand said today on its website. Supplies remain limited due to rainfall in the country’s southern provinces, a key rubber plantation area. The benchmark Thai price gained 0.2 percent to 104.15 baht ($3.23) a kilogram, the institute said. Thailand is the largest rubber producer and exporter.

Source: Bloomberg

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