Rubber at record high for second day

RUBBER advanced to an all-time high for a second day amid speculation record prices will not deter tiremakers from purchasing the raw material used in tires as auto sales continue to climb.
The July-delivery contract jumped as much as 2.2 per cent to 515 yen a kilogram ($6,240 a metric ton) before trading at 514.5 yen on the Tokyo Commodity Exchange at 12:02 p.m.
Sumitomo Rubber Industries Ltd., Japan’s second-largest tire maker, raised its earnings estimate yesterday, citing strong sales of snow tires in the domestic market and expanding demand overseas. Bridgestone Corp., the world’s largest manufacturer, yesterday announced increases of 8 percent to 15 per cent in product prices for the Japanese market from June 1.
“Tire producers may have no other options but to increase rubber purchases, regardless of record prices, as they have to raise output to meet expanding demand,” Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co., said today.

Rubber futures have gained 24 per cent this year, extending last year’s 50 per cent rally, as rising car sales led by China and India boosted demand for tires. Shipments from Thailand, Indonesia and Malaysia, the top growers representing 70 percent of global supply, were curbed by heavy rains.
Nissan Motor Co., Japan’s second-largest automaker, raised its profit forecast yesterday after new models and increasing sales in North America and Asia helped the company offset the impact of the strong yen. The company expects to sell 4.165 million vehicles in the year ending March 31, up from an earlier forecast of 4.1 million.
Car-sales growth in China, the world’s biggest auto market, will be around 10 per cent to 15 per cent this year, according to the China Association of Automobile Manufacturers. Total auto sales, which include cars, trucks and buses, jumped 32 percent last year to 18.06 million, the group said.
Natural-rubber consumption in China may rise 9 percent to 3.6 million tons this year, while rubber use in India may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries.
In Shanghai, May-delivery rubber gained as much as 2.6 percent to 43,290 yuan ($6,573) a metric ton before trading at 43,100 yuan at 10:38 a.m. local time. The price climbed to a record 43,500 yuan yesterday.
The physical price of natural rubber in Thailand, the world’s largest exporter, extended gains to an all-time high of 187.80 baht ($6.12) per kilogram yesterday, boosted by strong demand from local and overseas buyers amid concerns over supply shortages, the Rubber Research Institute of Thailand said.
Output from Thailand, Indonesia and Malaysia has been cut as a La Nina weather event caused higher-than-average rains in parts of Southeast Asia.
Supply is expected to decline further in coming months as the seasonal low-production period will start in major growing areas in Thailand, Tasaka at ACE Koeki said. Farmers reduce tapping during the so-called wintering period from February to May, when trees shed leaves and latex production drops. - Bloomberg
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