Rubber Gains for Second Day on Speculation China Is Restocking

By Supunnabul Suwannakij

July 5 (Bloomberg) -- Rubber, trading unchanged, may climb for a second day on speculation that demand may increase as China and Japan replenish declining inventories.

Futures in Tokyo swung between a gain and loss of 0.6 percent. The price touched 260.3 yen per kilogram ($2.962 a metric ton) on July 2, the lowest level since June 10, on concern that a slowing global economic recovery may weaken demand for the commodity used for tires and gloves.

“Warehouse stocks in Japan and China are low,” Kazunori Kokubo, general manager of the international business department, at commodity broker Yutaka Shoji Co., said by phone from Tokyo. “People are eyeing Thai supply conditions,” he said.

The December-delivery contract rose as much as 1.6 yen to 268.2 yen, before trading unchanged at 266.6 yen on the Tokyo Commodity Exchange at 11:04 a.m. local time. The commodity has declined 3.4 percent since the start of the year.

China’s natural-rubber inventories increased 1,211 tons to 15,982 tons last week, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on July 2. Still, stockpiles have slumped 89 percent this year.

November-delivery rubber on the Shanghai Futures Exchange gained 1.2 percent to 21,630 yuan ($3,193) a ton.

Tight global supplies and strong demand, especially from China, will support prices, the Association of Natural-Rubber- Producing Countries said in its June newsletter.

The possibility of a “marked improvement” in supply in the short term is limited given aging trees and weather constraints, the association said June 30.

Cash prices in Thailand fell on July 2 after U.S. economic data boosted concern that the global recovery may falter, according to the Rubber Institute of Thailand.

The Thai benchmark price tumbled 2.6 percent to 112.60 baht ($3.47) a kilogram that day. Prices are updated daily in the afternoons.

(bloomberg.com)