Rubber at Two-Week High as Asian Equities Rally Boosts Appeal

By Supunnabul Suwannakij

July 28 (Bloomberg) -- Rubber advanced for the second time this week, reaching a two-week high, as gains in Asian equity markets and a weaker Japanese currency boosted its appeal.

Futures climbed as much as 1.9 percent as Asian stocks rose, driving the MSCI Asia Pacific Index higher for the fourth straight day, on optimism over improving corporate earnings.

“Rallies across the Asian market spilled over to commodities, including rubber,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

December-delivery rubber climbed as high as 268.6 yen per kilogram ($3,058 a metric ton) on the Tokyo Commodity Exchange at 12:16 p.m.

November-delivery rubber on the Shanghai Futures Exchange added 2.6 percent to 22,745 yuan ($3,355) a ton.

“A weaker yen supports the rubber market,” Kazunori Kokubo, general manager of the international business department at commodity broker Yutaka Shoji Co., said by phone from Tokyo.

The currency weakened to 87.90 yesterday from 86.88 on July 26, making the yen-denominated rubber contract more attractive for holders of other currencies.

Low stockpile levels in China and Japan led to speculation that buyers will step into the market to replenish inventories, Kokubo said.

“Warehouse stock in Japan is still very low and investors who hold short positions are worried about higher prices, prompting them to cover,” Kokubo said, referring to bets that prices would fall.

Data from the Tokyo exchange showed last week that natural- rubber stockpiles monitored by the bourse dropped by 29 percent to 1,341 tons as of July 10. It was the lowest level since at least 2001, according to exchange spokesman Seiki Ichimura.

Natural rubber stockpiles in China decreased 2,046 tons to 19,328 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said July 23.

(bloomberg.com)