Rubber Recovers From One-Month Low as Equities Rally, Yen Drops

By Aya Takada

July 14 (Bloomberg) -- Rubber recovered from a one-month low as a rally in global stocks boosted investor confidence in the economic recovery and a weaker Japanese currency raised the appeal of yen-based contracts.

Futures in Tokyo gained as much as 2.9 percent after reaching the lowest level since June 9. The price advanced for the first time in four days.

Asian stocks rose, pushing the region’s benchmark index to a three-week high, after Intel Corp. reported record second- quarter sales and Singapore raised its 2010 economic growth forecast. The yen declined against the dollar on signs of growth in U.S. companies.

“Market sentiment improved as stocks rallied on good corporate earnings,” boosting investor appetite for riskier assets, Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.

December-delivery rubber gained as much as 7.5 yen to 267.6 yen per kilogram ($3,009 a metric ton) before trading at 263.3 yen on the Tokyo Commodity Exchange at 12:04 p.m.

The MSCI Asia-Pacific Index gained 1.5 percent to 117.81 as of 11:14 a.m. in Tokyo, reaching the highest level since June 22. Singapore said its economy will grow between 13 percent and 15 percent this year, adding to confidence in the economic recovery after Greece sold bonds at a rate below what the country pays for European aid.

Gains Limited

Gains in rubber futures were limited amid concern that demand in China, the world’s largest consumer, may weaken after car sales growth slowed, Sugata said.

November-delivery rubber on the Shanghai Futures Exchange fell as much as 1 percent to 20,985 yuan ($3,098) a ton before trading at 21,290 yuan at 11:08 a.m. local time.

The price may extend declines if Vietnam, the fifth-biggest producer, resumes full border trade with China after a halt last month to combat smuggling, analysts said.

Anti-smuggling efforts by the Chinese and Vietnamese governments have cut off supplies for several weeks, Li Shiqiang, general manager at Sri Trang (Shanghai) Ltd., a unit of Thailand’s largest publicly traded rubber exporter, said in a phone interview.

“For the past few months, the border gates to China have been sometimes open, sometimes closed. Prices were unstable, causing a lot of difficulty for Vietnam’s rubber companies,” Dinh Thi Thanh Tam, deputy director at Hoa Thuan Co., a natural rubber producer and exporter, said from Ho Chi Minh City.

Sales of cars, sport-utility vehicles and multipurpose vehicles in China, the largest auto market, grew 19 percent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said July 9. It was the slowest pace since March 2009 as dealers’ inventories increased.

(bloomberg.com)