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The prospect of strong demand in the second half of the year from Asian car-producing countries is likely to push Tokyo rubber futures higher in August but concern about the state of the world economy could limit the gains, traders said.
The benchmark sixth-month rubber contract on the Tokyo Commodity Exchange, currently January 2012, was forecast to be at 390.0 yen per kg by the end of August, according to the median forecast of 10 analysts polled by Reuters.
That was slightly higher than the actual closing price at the end of July of 386.5 yen, but well above a forecast of 350 yen in a previous poll at the end of June.
The latest poll was conducted this week. Stock and commodity markets have slumped in the past few days because of growing concern about the U.S. economy and the spreading euro zone debt crisis.
The TOCOM benchmark was at 380.8 yen at 0506 GMT on Friday (Aug 5), down around 2.5 percent on the day.
“Car industries in Japan are likely to accelerate in the second half to offset falls in output caused by the earthquake, while demand elsewhere in Asia, especially India, should rise further,” said a trader in Thailand’s Hat Yai rubber centre.
The Indian unit of Japanese car maker Nissan Motor, for example, is aiming to triple sales to 40,000 vehicles by the end of this fiscal year, helped by the launch of its new mid-sized sedan.
India, the world’s second-biggest rubber consumer, is likely to import a record 200,000 tonnes of natural rubber in the year ending March 31, 2012 as tyre makers cash in on lower customs duties.
“Rubber stocks in Japan are still low and that could reflect strong demand there,” said a Tokyo-based trader.
Japan’s crude rubber inventories fell 3 percent in the 10 days to July 20 to their lowest in about 10 months, according to the Rubber Trade Association of Japan’s data.
As for supply, traders do not expect a significant rise even though major rubber-producing countries are in their tapping season. Weather in Thailand, the biggest exporter, is hard to predict in August and September when seasonal storms can bring heavy rain liable to disrupt tapping and transport.
Tropical storm Nock-Ten hit the north of Thailand this week and earlier than usual rain has hit the south, the main rubber area.
With limited supply in prospect, the poll forecast that TOCOM prices would rise further to 400 yen per kg by the end of September, although uncertainty about the global economy may put that level in doubt in coming weeks.
The spread of forecasts was wide, running from 350 to 420 yen per kg.
On the physical front, rubber prices were expected to stay at a relatively firm level, at a time when supply may be limited, dealers said.
The benchmark Thai smoked rubber sheet was forecast to be at $4.65 per kg at the end of August, little changed from $4.80 at the end of July, according to the poll. It was still at $4.80 on Friday (Aug 5).
Source: Reuters