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Rubber futures extended a rally to a record after data showed manufacturing in the U.S. expanded at the fastest pace in seven months, raising concern that increased demand will worsen a supply shortage. The Thai cash price also climbed to an all-time high.
June-delivery rubber surged to as high as 427 yen per kilogram ($5,194 a metric ton) on the Tokyo Commodity Exchange in after-hours trading. Trading in this session will be settled on Wednesday. The most-active contract extended last year’s advance of 50 percent.
Japanese stocks climbed, extending a global rally, after manufacturing in the U.S. expanded in December, boosting confidence in the economic recovery. Oil reached a 27-month high in New York yesterday, increasing the appeal of natural rubber as an alternative to synthetic products made from petroleum.
“Optimism about the U.S. economic growth increased investor purchases of industrial commodities,” Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co., said today by phone. “Rubber is also supported by tight supplies as shipments from Thailand remain low.”
The cash price in Thailand, the largest producer and exporter, surged to a record 152.55 baht ($5.08) per kilogram, rising 2 percent from Dec. 30, as rains across the country’s southern provinces limited supplies, the Rubber Research Institute of Thailand said on its website today. Supply will decline further as Thailand enters a low-production period next month, Tasaka said.
Latex production in Thailand is set to shrink as growers will reduce tapping of rubber trees from February to April during the so-called wintering period. The seasonal drop in output may worsen a supply shortage as global demand will keep rising, led by car sales in China and India.
China Car Sales
“Demand remains strong, especially from China, even though prices rallied to an all-time high,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures Ltd.
China’s sales of passenger cars including multipurpose and sport-utility vehicles increased 29.3 percent to 1.34 million in November, higher than the previous record of 1.32 million in January, according to the China Association of Automobile Manufacturers. The pace of growth was the fastest since April.
Rubber imports by India jumped to 10,500 tons in December from 6,138 tons a year ago, the state-run Rubber Board said yesterday. Overseas purchases totaled 156,608 tons in the April- December period, compared with 145,459 tons a year earlier.
China’s natural-rubber inventories were at 66,515 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Dec. 31. That was 56 percent lower than last year’s high of 151,832 tons.
Rubber futures also gained as the Japanese currency weakened against the dollar, boosting the appeal of yen- denominated contracts, Tasaka at ACE Koeki said.
The yen dropped to 82.14 per dollar at 4:34 p.m. in Tokyo from 81.74 in New York yesterday. The U.S. currency rose as the Institute for Supply Management’s index climbed to 57 last month from 56.6 in November, adding to signs the recovery in the world’s largest economy is gaining traction. The figure matched the median forecast of economists surveyed by Bloomberg News.
May-delivery rubber in Shanghai gained 1.1 percent to close at 37,610 yuan ($5,690) a ton. It reached a record 38,920 yuan on Nov. 11.
Source: Bloomberg