Rubber Has Best Weekly Gain Since December as Demand Recovers

By Aya Takada

May 28 (Bloomberg) -- Rubber climbed for a third day and booked the largest weekly gain since December as a rally in oil raised the appeal of the commodity and an advance in equities boosted investor interest in risk assets.

Futures in Tokyo advanced as much as 2.6 percent to the highest level since May 6. The price has climbed 6.8 percent this week, the best performance since the week ended Dec. 18.

Oil was poised for its first weekly gain in four weeks after China affirmed its commitment to investing in Europe and U.S. reports signaled that energy demand may recover with an economic rebound. Asian stocks climbed for a third day, after China said a report that it was reviewing foreign-exchange holdings of euro assets was “groundless.”

“Sales spurred by Europe’s debt concern have subsided after the report from China,” Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. “Rubber tracked a recovery in oil and stocks.”

Rubber for November delivery, the most-active contract, gained as much as 7.3 yen to 288.6 yen per kilogram before settling at 284.8 yen on the Tokyo Commodity Exchange.

The price may surpass the 2008 peak of 356.9 yen per kilogram this year to reach the highest level since March 1980, Kazuya Tetsu, executive manager at Tokyo-based broker Yutaka Shoji Co., said in an interview yesterday.

Market Direction

“China’s influence on the market and global economies is getting stronger,” Tetsu said. Demand from the country “is setting the market’s direction,” he said.

The European debt turmoil, which triggered a selloff of the raw material this month, may force governments to keep interest rates low and delay implementation of their “exit policy,” leading to renewed investor interest in commodities as an inflation hedge, he said.

Crude rose 4.3 percent yesterday to settle at $74.55 and was little changed today. The MSCI Asia Pacific Index gained 1.5 percent to 113.36, extending a global rally.

“Investors’ concerns are mitigated by China’s intention to invest in Europe,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

Futures also increased after cash rubber prices in Thailand, the largest producer and exporter, increased. Thai prices extended gains as rain in some southern provinces disrupted tapping, lowering supply, the Rubber Research Institute of Thailand said on its website.

Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram yesterday, according to the institute. Thailand’s market is closed today for a public holiday.

September-delivery rubber on the Shanghai Futures Exchange added 1.4 percent to settle at 22,905 yuan ($3,353) a ton.

(bloomberg.com)