Rubber Advances as U.S. Equities Rally on Fed Growth Measures Speculation

Rubber advanced as equity markets rallied amid optimism that the Federal Reserve may pass more measures to enhance economic expansion.

January-delivery rubber in Tokyo rose as much as 1 percent to 284.8 yen a kilogram ($3,316 a metric ton) before trading at 282.9 yen as of 11:34 a.m. local time. The contract advanced 3.5 percent last week, the biggest increase since the week ended June 25.

The Standard & Poor’s 500 Index climbed as much as 0.5 percent on bets the U.S. central bank will introduce measures to stimulate growth during a policy meeting tomorrow.

“Equities markets advancing and the energy market stabilizing help boost gains on the rubber market,” said Katsumi Kinoshita, senior manager for Institutional Department of Orion Koeki Co.

A forecast that rubber futures may climb to two-year high is also “providing positive sentiment to the market,” Kinoshita said by phone from Kobe.

Rubber futures may climb to a 25-month high as supply lags behind growing demand because of bad weather, according to Von Bundit Co., the largest producer in Thailand, the world’s biggest exporter.

“Global production will continue to be below demand until 2012 and that will support prices in a range of 250 to 350 yen per kilogram between now and 2011,” Pongsak Kerdvongbundit, managing director of Von Bundit, said in an interview.

Car Sales

“Sentiment remains bullish as car sales in China and India continue to expand,” Kinoshita said.

India’s passenger car sales rose to a record in July as economic growth and new models from Ford Motor Co. and Volkswagen AG boosted demand.

Sales rose 38 percent to 158,764 vehicles from a year earlier, the Society of Indian Automobile Manufacturers said in a statement yesterday. That’s the highest monthly total the association has recorded, said Vishnu Mathur, director general of the group.

China’s passenger-car sales to dealerships increased 13.6 percent in July. Vehicle sales including buses and trucks gained 14.4 percent in July to 1.24 million, the China Association of Automobile Manufacturers said.

January-delivery rubber in Shanghai surged as much as 1.6 percent to 25,200 yuan ($3,721) a ton before trading at 24,960 yuan.

The free-on-board price of the benchmark Thai RSS-3 grade rubber for September-delivery, which excludes freight and insurance, was unchanged yesterday at 104.50 baht ($3.27) a kilogram, according to the Rubber Institute of Thailand.

(bloomberg.com)