Rubber Gains to One-Week High as U.S. Sales Ease Growth Concern

By Aya Takada

July 8 (Bloomberg) -- Rubber advanced to a one-week high after a U.S. trade group said that retail sales increased at the fastest pace in four years, stoking optimism that demand for the commodity used in tires may strengthen.

Futures in Tokyo climbed as much as 2.6 percent to the highest level since June 29. The price also increased as an advance in oil boosted the appeal of natural rubber as an alternative to synthetic products made from petroleum.

Asian stocks extended a global rally after the International Council of Shopping Centers said sales were growing at the fastest pace since 2006, easing concern that a slump in consumer confidence will undermine the recovery of the world’s biggest economy. The dollar advanced against the Japanese currency, raising the appeal of yen-based contracts.

“A rally in equities markets improved investor sentiment, leading to purchases of the commodity,” Hisaaki Tasaka, analyst at Tokyo-based broker ACE Koeki Co., said today by phone.

December-delivery rubber gained as much as 6.9 yen to 277 yen per kilogram ($3,136 a metric ton) before trading at 275.9 yen on the Tokyo Commodity Exchange at 11:21 a.m. local time.

The shopping centers group said retail sales probably expanded at an average monthly rate of 4 percent in the first five months of the retail fiscal year that began Jan. 31.

U.S. Economy

“The focus now is on how the U.S. economy is doing,” said Mitsushige Akino, who oversees $450 million at Tokyo-based Ichiyoshi Investment Management Co. “The general consensus was that the economy was going to deteriorate, and the good retail sales put a brake on that view.”

Crude oil for August delivery gained 1.2 percent to $74.92 a barrel in electronic trading on the New York Mercantile Exchange at 11:23 a.m. Tokyo time. Yesterday, the contract rose 2.9 percent to $74.07.

The November-delivery rubber on the Shanghai Futures Exchange added 1.8 percent to 22,190 yuan ($3,275) a ton.

The benchmark price in Thailand remained unchanged for a fifth day at 112.60 baht ($3.47) a kilogram yesterday, according to the Rubber Institute of Thailand. The group reviews the price daily and issues data in the afternoon.

Tight global supplies and strong demand, especially from China, will support prices, the Association of Natural-Rubber- Producing Countries said in its June newsletter. Gross imports of natural rubber by China, the largest consumer, are projected to climb 5 percent this year to 1.67 million tons, it said.

(bloomberg.com)