Rubber climbed to the highest level in six months as persistent rainfall in key producing countries raised concerns that supplies may tighten amid increasing purchases from China, the largest buyer. Shanghai rubber advanced to a record.

Futures in Tokyo gained as much as 2 percent to 334.6 yen per kilogram ($4,091 a metric ton), the highest level since April 19, before trading at 333.4 yen at 2:22 p.m. local time. Shanghai futures surged as much as 4.6 percent to a record 30,670 yuan a ton ($4,599), the Shanghai Futures Exchange said in an e-mail.

“The rubber industry remains bullish as Chinese buyers have increased purchases after National Day holidays as its inventories are still low,” said Varut Rungkhum, an analyst at Bangkok-based commodity broker Agro Wealth Ltd.

China imported 190,000 metric tons of natural rubber in September, the customs agency said today on its website.

“The high level of China imports reflects that demand there continues to grow and will likely expand to replenish its stockpiles,” Chaiwat Muenmee, analyst at commodity broker DS Futures Co., said by phone from Bangkok. “Inventories in China and Japan remain low, while rubber supplies are limited, which will bolster prices.”

Rubber stockpiles held at Japanese warehouses expanded 26.1 percent to 7,282 tons on Sept. 20, according to data from the Rubber Trade Association of Japan released yesterday.

Natural-rubber inventories climbed 5,320 tons to 36,900 tons, the Shanghai exchange said Oct. 8, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin. That’s 76 percent lower than this year’s high of 151,832 tons on Jan. 21.

The March-delivery contract on the Shanghai Futures Exchange last traded 3.2 percent higher at 30,280 yuan.

Hainan Flood

“Rainfall this year has been longer and heavier than the previous year, lowering latex levels in key producing countries,” Varut said by phone today. “Floods in Hainan will probably reduce output in China.”

Flooding in China’s southern island province of Hainan forced the evacuation of 440,000 people and destroyed 3,000 houses, with more rain expected, Xinhua News Agency reported yesterday, citing Governor Luo Baoming. A total of 166,700 hectares (411,925 acres) of crops have been damaged, including 74,000 hectares destroyed, the news agency said.

Cash prices in Thailand added 0.3 percent today to 116.80 baht ($3.92) per kilogram as China raised purchases to substitute declining output from flooding in rubber plantation area, according to the Rubber Research Institute of Thailand. Local rubber processors also accelerated purchases on worries over supply shortage, the institute said.

Rubber prices in Indonesia, the world’s second-largest producer, climbed to $3.87 a kilogram today as heavy rain disrupted tapping, lowering production, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said by phone today.

The price may advance to $4 a kilogram by the end of the month because of a “supply shortage,” while domestic demand keeps expanding, he added.

Source: Bloomberg

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