Rubber Climbs for First Day in Three as Oil Rally Boosts Appeal

By Supunnabul Suwannakij and Aya Takada

May 18 (Bloomberg) -- Rubber advanced for the first time in three days as rising crude oil prices improved the appeal of the raw material used to make tires.

Futures gained as much as 4.1 percent after falling 3.6 percent yesterday to the lowest close in five months. The price reached a 21-month high of 338.5 yen per kilogram ($3,656 a metric ton) April 16 on a seasonal decrease in supply from Thailand, the largest exporter.

Crude oil advanced for the first time in six days as some investors took the view a drop below $70 a barrel made the commodity attractive to buy. Natural rubber typically tracks oil prices as a gain in crude boosts the cost of synthetic rubber made from petroleum.

“Oil staying above $70 a barrel provides positive sentiment to the rubber market,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok.

Rubber for October delivery, the most-active contract, gained as much as 10.3 yen to 263.1 yen before settling at 262 yen on the Tokyo Commodity Exchange.

Crude oil for June delivery climbed as much as 1.5 percent to $71.12 a barrel on the New York Mercantile Exchange before trading at $70.99 at 4:07 p.m. in Tokyo. Yesterday, the contract fell to $70.08 a barrel, the lowest settlement since Dec. 14.

The cash market in Thailand, world’s largest producer, remains closed for a second day as political turmoil escalates. At least 38 people have been killed since May 13 and more than 200 injured after protesters occupied parts of downtown Bangkok.

“The political turmoil is unlikely to affect the Tocom market as rubber exports haven’t been disrupted,” said Chaiwat.

September-delivery rubber on the Shanghai Futures Exchange added 3.6 percent to 21,825 yuan ($3,197) a ton.