Hainan Rubber soars on debut as rubber sets record

Shares in plantations group Hainan Rubber more than doubled on their debut, helped by rubber setting a record price for a third day amid stockpiling ahead of a seasonal production dip.

Hainain Rubber shares - which were floated at 5.99 yuan, the top of the indicated range of 5.50-5.99 yuan - soared to an intraday high of 12.36 yuan in Shangai.

The stock ended at 11.01 yuan, up 84% on its debut.

The performance of the stock came as rubber futures set a record high in Tokyo of 435.10 yen per kilogramme, before themselves suffering a late sell-off, amid a rally in the commodity which many analysts believe has further to run.

"Rubber prices are expected to continue to rise on the back of persistent concerns over tight supply early this year and generally positive market sentiment, Ker Chung Yang, analyst at Phillip Futures in Singapore, said.

"The outlook for rubber in the early [part] of the year may remain positive."

Physical prices of rubber in Thailand, the top producer of the tyre ingredient, also set a record top, of $5.30 a kilogramme for the benchmark Thai RSS3 grade.

Winners and losers

The hunger for shares in Hainan Rubber, China's top rubber producer, contrasts with the sluggish performance of stock in tyremakers, which have been undermined by fears that they will be unable to pass on to customers soaring costs of their main raw material.

Shares in groups as Michelin and Pirelli put in flat performances in December, a bravura month for most shares.

Rubber prices are being underpinned by expectations that global economic recovery will boost consumer demand for cars, and demand for trucks, at a time when major producers of natural rubber have been struggling against heavy rains, blamed on the La Nina weather pattern.

Supplies face a further challenge next month when Thailand halts rubber tapping until April for the so-called wintering period.

Growth plans

Hainan Rubber, which has plans to increase rubber production capacity to 500,000 tonnes by 2012, is still majority owned by Hainan State Farms Group after the offering, of 786m shares.

The $700 raised by the flotation will be used to support its expansion plans, as well as for equipment improvements and to underpin working capital.

(Source: http://www.agrimoney.com/news/hainan-rubber-soars-on-debut-as-rubber-sets-record--2677.html)