Rubber Ends Three-Day Slump on Crude Oil Gains, China's Manufacturing Data

Rubber ended a three-day decline as crude oil rose and data showed growth in China’s manufacturing accelerated, boosting speculation demand will expand from the world’s largest consumer of the commodity used in tires.

The most-active contract on the Tokyo Commodity Exchange gained as much as 0.9 percent to 329.8 yen per kilogram ($4,084 a metric ton) before settling at 327.2 yen. The contract fell as much as 1 percent earlier as Japan vehicle sales tumbled and on speculation the Japanese currency may strengthen if the Federal Reserve goes ahead with easing policies that will further debase the dollar, reducing the appeal of the yen-denominated commodity.

“Crude oil gains and robust Chinese manufacturing data boosted rubber,” said Varut Rungkhum, analyst at Bangkok-based commodity broker Agro Wealth Ltd. “Rubber was trapped in a tight range on worries over lower car sales in Japan and the strengthening yen,” he said.

China’s Purchasing Managers’ Index increased to 54.7 in October, the Federation of Logistics and Purchasing said. The reading compared with 53.8 for both the previous month and the median forecast of 13 economists surveyed by Bloomberg News.

“The data showed the strength of China’s industrial production,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Chinese demand for raw materials will keep expanding.”

Oil Climbs

Oil rose in New York as the dollar declined on speculation the Federal Reserve will announce another round of credit-easing measures to help spur growth in the U.S., the world’s largest crude user. Crude oil futures gained as much as 0.7 percent to $81.96 a barrel from $81.43 on Oct. 29. The Fed starts a two-day meeting tomorrow where it may announce another round of asset purchases known as quantitative easing.

Sales of cars, trucks and buses, excluding minicars, fell 27 percent to 193,258 vehicles in October from a year earlier, the Japan Automobile Dealers Association said in a statement today. Toyota, the world’s largest carmaker, sold 101,518 units, excluding Lexus-brand cars, down 24 percent.

Industrywide car sales in Japan may plunge 23 percent in the six months beginning in October from a year earlier, after a government subsidy for fuel-efficient cars ended Sept. 8, according to the Japan Automobile Dealers Association.

May-delivery rubber on the Shanghai Futures Exchange surged as much as 3.9 percent to 31,950 yuan ($4,784) a ton before closing at 31,420 yuan.

Margin Requirements

The contract tumbled as much as 5.6 percent on Oct. 29 as the Shanghai exchange said it raised the natural rubber futures margin requirement to 11 percent from the current 8 percent, effective Nov. 2. The measure was taken to ensure market stability and prevent risks, the bourse said. Rubber futures in Shanghai climbed to a record 33,320 yuan on Oct. 26.

The move by the Shanghai exchange came after the Zhengzhou Commodity Exchange increased the margin requirements for rice, rapeseed oil, wheat and sugar trading on Oct. 26. The action was taken after the Zhengzhou exchange said it would track “abnormal” trading and recommend investigation by watchdogs.

In the cash market, Thai exporters raised offers for so- called RSS-3 grade rubber for December shipment to $3.98 a kilogram from $3.94 a week earlier, said Saito at Fujitomi. Prices gained as rain curbed latex supply, he said.

A natural-rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, according to the Association of Natural Rubber Producing Countries.   

(bloomberg.com)