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Rubber advanced to a record for a fourth day as rising demand, led by China, boosted speculation that global consumption will outpace supplies that have been curbed by persistent rain in producing nations.
The June contract gained as much as 1.3 percent to 460.4 yen per kilogram ($5,551 a metric ton) on the Tokyo Commodity Exchange and settled at 458.3 yen. Rubber has advanced as much as 11 percent this month, extending the 50 percent rally in 2010.
“The market is pretty bullish as demand from China remains strong,” Ker Chung Yang, an investment analyst at Phillip Futures, said by phone today from Singapore. “There are supply problems from Thailand and Indonesia due to weather.”
Rubber may extend its rally as the rains reduce supply, compounding a seasonal drop in output, while car sales boost demand. The price may advance to 500 yen per kilo in the first half, according to the median forecast of the four analysts and fund managers surveyed last week by Bloomberg News.
“Demand remains strong even though the price keeps hitting new highs,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok. Buyers had accelerated purchases before Lunar New Year, she said, referring to the week-long holiday that starts in China on Feb. 2.
The Thai cash price rallied to a record 169.30 baht ($5.54) per kilogram today as demand outpaced supply and some farmers in northeastern provinces stopped tapping, the Rubber Research Institute of Thailand said. Declining stockpiles in China were also supportive, the institute said on its website.
Lower Stockpiles
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said on Jan. 14. That’s 55 percent lower than last year’s peak of 151,832 tons.
May-delivery rubber in Shanghai gained as much as 0.8 percent to 38,885 yuan ($5,899) per ton and closed at 38,260 yuan. The price reached a record 38,920 yuan on Nov. 11.
Thai output during the leaf-shedding season, which runs from the end of February until May, drops as much as 60 percent from peak levels, the Association of Natural Rubber Producing Countries said in December. The low-production period also occurs at the same time in northern Indonesia and Malaysia.
The high level of crude-oil prices also supported rubber, Ker said. Natural rubber typically gains in line with crude prices as oil is used to make synthetic rubber.
Oil traded near $91 a barrel today after industrial output in the U.S. rose in December, signaling fuel demand may increase. The February-delivery contract gained as much as 0.3 percent to $91.80 a barrel on the New York Mercantile Exchange.
Source: Bloomberg