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Rubber climbed for the first time in five days, nearing a three-and-a-half-month high, as demand from China, a weaker Japanese currency and crude oil gains enhanced the appeal of the commodity used to make tires.
Rubber futures surged as much as 3 percent after retreating to one-week low yesterday. The price has advanced 7.8 percent this month, headed for a second monthly gain.
“Physical buying coming from China gives the strength to the market,” Felix Yeo, trading manager at the Singapore unit of Marubeni Corp., said by phone today. Rising oil prices and a weakening yen also provide the support, he said.
The January-delivery contract settled at 294 yen per kilogram ($3,472 a metric ton) on the Tokyo Commodity Exchange after advancing to 294.9 yen, nearing a three-month high reached on Aug. 20. The February-delivery contract, which was listed on the bourse today, rose to 295.5 yen.
The Japanese currency weakened for a second day against the dollar amid speculation policy makers will take measures to curb an advance. The yen fell to 84.69 per dollar at 3:56 p.m. in Tokyo from 84.58 in New York yesterday.
Crude oil rose for a second day as U.S. equities climbed yesterday after a report that sales of new homes dropped in July to the lowest level on record. Rising oil prices improve rubber’s competitiveness against its synthetic rival.
China Stockpiles
China’s natural rubber inventories expanded for a fourth week, growing by 2,858 tons to 24,733 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Aug. 20.
The country is expected to import 135,000 tons of natural rubber in August and a further 130,000 tons in September, the Association of Natural Rubber Producing Countries said in its newsletter this month. China’s gross imports this year may rise 5 percent to 1.67 million tons, the association said.
“Thailand and Malaysia have been affected by some rains, raising supply concern,” Yeo said from Singapore. Rainfall disrupts tapping, lowering rubber output.
Heavy rainfall is likely across Thailand until the end of August, the Thai Meteorological Department said on its website.
Cash prices in Thailand climbed 0.8 percent to 105.6 baht ($3.36) per kilogram, driven by demand from rubber processors and limited supply availability, the Rubber Research Institute of Thailand said on its website today.
January-delivery rubber on the Shanghai Futures Exchange advanced 2.7 percent to 25,520 yuan ($3,753) a ton.
Source: Bloomberg