Rubber Nears 20-Month High as Signs of Recovery Increase Demand

By Aya Takada

April 14 (Bloomberg) -- Rubber advanced to near a 20-month high as signs of an accelerating global economic recovery led by Asia boosted confidence that demand may increase for the commodity used in vehicle tires.

Futures in Tokyo gained as much as 0.6 percent to 330 yen per kilogram ($3,532 a metric ton), nearing 332.3 yen, the highest level since July 31, 2008, which was reached yesterday. The price advanced for the third time in four days.

Asian stocks rallied after Singapore’s government boosted its forecast for economic growth this year, while Korean unemployment fell by the most in a decade. A sales forecast from Intel Corp. that beat analysts’ estimates also lifted equities.

“Optimism that economic recovery is gathering pace spurred investors to buy risk assets such as stocks and commodities,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

Rubber for September delivery rose 0.6 percent to settle at 329.8 yen on the Tokyo Commodity Exchange.

The MSCI Asia Pacific Index gained 0.7 percent to 128.27 at 3:16 p.m. in Tokyo. The Monetary Authority of Singapore revalued its currency, sending it 1.1 percent higher against the dollar to $1.3776, as the government said the economy will expand as much as 9 percent this year.

Thai Output

Rubber futures have advanced 19 percent this year as global economies recovered from the worst postwar recession, boosting demand. A seasonal decrease in output in Thailand, the world’s largest producer, also increased prices, Sugata said.

Thailand is in a low-production period from February to April, known as wintering, when rubber trees shed their leaves and latex output slows.

Passenger-car sales in China, the world’s largest rubber consumer, surged 63 percent in March as government stimulus policies helped boost demand in the biggest vehicle market.

Sales of cars, multi-purpose vehicles and sport-utility vehicles rose to 1.26 million units last month, the China Association of Automobile Manufacturers said April 9. First- quarter sales jumped 76 percent to 3.52 million, the group said.

September-delivery rubber on the Shanghai Futures Exchange added 0.8 percent to 25,575 yuan ($3,747) a ton at 2:39 p.m. local time.

(businessweek.com)