Rubber Climbs to 2-Week High as U.S. Data Boosts Demand Outlook

By Aya Takada

June 16 (Bloomberg) -- Rubber climbed to a two-week high after growth in New York manufacturing boosted expectations that demand will increase for the commodity used to make tires.

Futures in Tokyo advanced for a fifth day and reached the highest level since June 1. The price has gained 3.5 percent this year amid speculation that Europe’s sovereign-debt crisis may not stall global economic recovery.

Equities and commodities rallied after reports showed New York-area manufacturing expanded for an 11th month. The MSCI Asia Pacific Index gained for a fifth day after having fallen 11 percent from a 52-week high on April 15 on concern that mounting government deficits will deter some European nations from shoring up their economies through spending.

“Investor attention has shifted to the strength of the U.S. and Chinese economies from the European debt problems,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Rubber chased a rally in equities and energy markets.”

November-delivery rubber gained as much as 3.1 percent to 286.7 yen a kilogram ($3,125 a metric ton) before settling at 285.7 yen on the Tokyo Commodity Exchange.

All 57 stocks in the S&P 500 Industrials Index gained after the Federal Reserve Bank of New York’s general economic index increased to 19.6, in line with the median forecast of economists surveyed by Bloomberg News. Prices of goods imported fell 0.6 percent in May, led by the biggest drop in petroleum costs since December 2008, Labor Department figures showed.

U.S. Manufacturing

“U.S. manufacturing, supported by low interest rates and the buoyant Chinese economy, are recovering steadily,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc.

Rubber futures dropped to a three-week low on June 9 on expectations that supply from Thailand, the world’s largest producer and exporter, will increase seasonally.

Cash-rubber prices in Thailand extended gains yesterday as a slower-than-usual gain in supply wasn’t enough to meet increasing demand, the Rubber Institute of Thailand said on its website.

The free-on-board price of RSS-3 grade for July delivery gained 0.6 percent to 115.10 baht ($3.55) a kilogram yesterday, according to the institute.

The Shanghai rubber market is closed for a holiday and reopens on June 17.

(bloomberg.com)