Rubber Climbs to One-Month High as Supply in China Declines

By Aya Takada

June 28 (Bloomberg) -- Rubber advanced to a one-month high after data showed stockpiles in China, the largest consumer, declined to the lowest level in seven years.

Futures in Tokyo climbed to 288.6 yen per kilogram ($3,231 a metric ton), matching a high reached on May 28. The price gained 3.8 percent last week, booking the second weekly increase, as rainfall disrupted production in Thailand, the world’s biggest producer and exporter.

Natural rubber stockpiles monitored by the Shanghai Futures Exchange dropped 1,670 tons to 14,771 tons, the bourse said on June 25. It was the lowest level since January 2003, according to the Bloomberg data.

“Chinese buyers may have withheld rubber purchases amid speculation that the raw material prices would drop on a seasonal increase in production,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “As rubber prices have stayed high,” they may step up buying to replenish inventories, he added.

Rubber for December delivery rose to 284.1 yen at 10:44 a.m. local time from its settlement of 278.6 yen on June 25. It has become the most-actively traded contract on the Tokyo Commodity Exchange after its listing on June 25.

November-delivery rubber on the Shanghai Futures Exchange added 1.7 percent to 22,265 yuan ($3,278) a ton at 9:47 a.m. local time. Earlier, it rose to 22,355 yuan, the highest level since June 2.

China Demand

China, the largest auto market, is the biggest consumer of natural rubber. The nation may increase gross imports of the raw material to 1.68 million tons this year, from 1.59 million in 2009, according to a May report from the Association of Natural Rubber Producing Countries.

The benchmark price in Thailand added 0.8 percent to 118.85 baht ($3.67) a kilogram, supported by limited supply and growing auto demand in many countries, the Rubber Institute of Thailand said June 25. The group, which reviews the price once a day, issues new data in the afternoon.

Rubber prices may climb 26 percent next year as supplies lag behind demand, according to Royal Bank of Scotland Asia Securities (Singapore) Pte.

Natural rubber may average $4,500 a ton next year, up from $3,580 a ton year-to-date, as “heavy rainfall in southern Thailand has disrupted supply” and “inventory levels in China are worse than we expected,” Nirgunan Tiruchelvam, a commodities analyst at the bank, said in an e-mailed report last week.

(bloomberg.com)