Rubber Futures Advance as U.S. Data Raise Demand Outlook, Supply Limited

Rubber increased as improvement in U.S. employment and consumer sentiment boosted speculation that demand will expand for the commodity used in tires, and as supply is limited from Thailand, the largest exporter.

April-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.6 percent to 368.7 yen per kilogram ($4,419 a metric ton) before settling at 362.6 yen. The price reached a 30-year high of 383 yen on Nov. 11.

Asian stocks advanced after data showed U.S. jobless claims dropped to the lowest level since 2008, bolstering optimism that economic growth will accelerate. Rubber supply from Thailand and other Asian producers remains tight after rain and flooding disrupted plantation work, saidKazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co. in Tokyo.

“The market drew support from good economic data from the U.S.,” Saito said by phone today. “Fundamentals remain positive as supply is curbed by weather problems.”

The cash price of natural rubber in Thailand gained 0.2 percent to 131.55 baht ($4.38) per kilogram today, boosted by strong demand amid a supply shortage, according to the Rubber Research Institute of Thailand. The price reached a record 132.75 baht per kilogram on Nov. 23.

The U.S. Labor Department said jobless claims fell to 407,000 last week. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The Thomson Reuters/University of Michigan final index of November consumer sentiment increased to 71.6, the highest level since June and exceeding the median economist estimate of 69.5.

Shanghai Futures

May-delivery rubber in Shanghai lost 1.8 percent to 31,690 yuan ($4,765) a ton at 2:42 p.m. local time. The price retreated from a record 38,920 yuan on Nov. 11 on concern that China, the largest consumer, may take additional steps to curb inflation and slow its economic growth, Saito said.

China’s central bank said it will strengthen liquidity management and “normalize” monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that’s at a two-year high.

The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People’s Bank of China, said in a statement posted to the central bank’s website yesterday. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government’s 7.5 trillion yuan ($1.13 trillion) target for new loans in 2010, she said.

Premier Wen Jiabao’s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by the end of the year.

China’s recent moves to crack down on speculation in commodities have worked, and prices of goods from cotton to copper have all declined, the National Development and Reform Commission said in a statement on its website today.

(Source: http://www.bloomberg.com/news/2010-11-25/rubber-futures-advance-as-u-s-data-raise-demand-outlook-supply-limited.html)