Rubber climbed for a third day to the highest level in more than three months on concern that rainfall in key producing countries will reduce supply, boosting the appeal of the commodity used to make tires.
The January-delivery contract advanced as much as 1.4 percent to 293.3 yen a kilogram ($3,430 a metric ton) on the Tokyo Commodity Exchange, the highest level since May 6, before trading at 292.5 yen at 10:53 a.m. local time. The most-active contract is headed for the first weekly gain since Aug. 6.
“A lot of rain in Southeast Asia this year has affected supply,” Gu Jiong, analyst at commodity broker Yutaka Shoji Co., said by phone from Tokyo. The top three producers, Thailand, Indonesia and Malaysia, account for about 70 percent of output.
Heavy rainfall is expected across Thailand, the largest producer and exporter, this week and next, the Thai Meteorological Department said on its website.
“Some tire makers began to buy rubber before a new tax in Thailand takes effect in October,” said Jiong. “From now to Sept. 30, we will see more buyers from Asia and the U.S.”
A higher levy on Thai rubber exports ranging from 0.9 baht (3 cents) to 5 baht a kilogram based on a sliding scale of free- on-board prices, will take effect Oct. 1, from the existing levy of 0.9 baht a kilo to 1.4 baht.
Buying increased as some investors are worried supplies can’t be covered during long holidays in key producing countries, Jiong said.
Indonesia, the second-largest exporter, will be closed for holidays during Sept. 9-13. Malaysia will have three public holidays next month.
January-delivery rubber in Shanghai gained as much as 1.4 percent to 25,735 yuan ($3,790) a ton, before trading at 25,475 a ton.
Cash prices in Thailand advanced 0.7 percent yesterday to 105 baht ($3.32) per kilogram, boosted by demand from rubber processors and on concerns that rainfall will limit supply, the Rubber Research Institute of Thailand said on its website.
(bloomberg.com)
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