Rubber in Tokyo Advances to Five-Month High as Weather Cuts Thai Supplies

Rubber in Tokyo climbed to a five- month high as wet weather in Thailand limited supply. Shanghai futures declined.

The most-active contract advanced as much as 1.1 percent to 313.2 yen per kilogram ($3,744 a metric ton), the highest level since April 28, before trading at 311.2 yen on the Tokyo Commodity Exchange at 11:59 a.m. The price is set to rise more than 15 percent this quarter, the best advance since the three months ended Dec. 31.

Wet weather disrupted tapping rubber trees in Thailand, curbing latex production. Shippers in Thailand, the largest producer and exporter, raised offers for so-called RSS-3 grade rubber for November shipment to about $3.60 a kilogram from $3.52 at the end of last week, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“A strong physical market gave support to futures in Tokyo,” Tasaka said by phone today. “Considering costs for imports, it’s more economical to buy the contract for physical delivery in Tokyo.”

The March-delivery rubber on the Shanghai Futures Exchange lost 0.5 percent to 26,780 yuan ($4,002) a ton at 11:01 a.m. local time. The market came under pressure as investors were reducing long, or buy, positions before holidays, Tasaka said. China’s financial markets will be closed from Oct. 1 to Oct. 7 for National Day holidays.

The price earlier advanced to 26,955 yuan after data showed yesterday China’s manufacturing quickened in September, increasing speculation demand will expand from the largest user of the commodity used in tires.

China Manufacturing

A China purchasing managers’ index released by HSBC Holdings Plc and Markit Economics rose to 52.9, the highest in five months, from 51.9 in August. The data are seasonally adjusted and readings above 50 indicate an expansion.

Still, gains in Tokyo rubber futures were limited by concern that demand from Japan may weaken as a stronger yen threatens export-oriented manufacturers, Tasaka said.

Japan’s industrial production unexpectedly fell in August, adding to concerns the nation’s export-led recovery is slowing. Factory output decreased 0.3 percent from July, when it declined 0.2 percent, the Trade Ministry said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for a 1.1 percent gain.

Signs of slowing global demand and the yen’s appreciation are threatening earnings of companies from Murata Manufacturing Co. to Nissan Motor Co. Exports grew at the slowest pace this year in August and the Bank of Japan’s Tankan survey yesterday showed companies forecast pessimists will outnumber optimists by year-end.

The yen traded at 83.55 per dollar at 12:03 a.m. in Tokyo after climbing yesterday to 83.50, the highest level since Sept. 15, when it touched a 15-year peak of 82.88.

Cash price in Thailand fell 0.2 percent to 109.15 baht ($3.58) per kilogram as investors are concerned over strengthening yen and local currency, Rubber Research Institute of Thailand said on its website yesterday.

Limited supply following persistent rainfalls in southern Thailand remains price supportive, it said.

(bloomberg.com)