July 30 (Bloomberg) — Rubber rallied after data showed the economic slump eased in the U.S. and industrial output expanded in Japan, raising speculation raw material demand will recover.

Futures in Tokyo climbed as much as 1.2 percent, extending this month’s gain to 13 percent. The Federal Reserve said most of its 12 regional banks detected a slower pace of economic decline in June and July, adding to signs the U.S. recession is closer to an end. Japanese manufacturers increased production for a fourth month in June, capping the fastest quarterly output expansion in more than half a century.

“The market is supported by expectation for demand recovery,” Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.

Rubber for January delivery added 0.8 percent to 183.4 yen a kilogram ($1,932 a metric ton) on the Tokyo Commodity Exchange at 11:23 a.m. local time.

Japan’s industrial production expanded 2.4 percent in June from May, the Trade Ministry said today in Tokyo. Second-quarter output gained 8.3 percent from the first quarter, the steepest rise since 1953. Companies surveyed by the ministry planned to continue increases in July and August as well.

Leaner inventories and more than $2 trillion in stimulus spending by governments worldwide stabilized global demand, supporting exporters including Mitsubishi Motors Corp. Even with the month-on-month gains, companies are producing 23.4 percent fewer goods than last year, putting pressure on them to forgo investment and cut workers to maintain profits.

Rubber futures advanced 13 percent this month and are headed for the best monthly gain since October 2007 as a rally in global equities boosted optimism for an economic recovery and as rubber exporters curbed shipments.

Supply Cuts

Thailand, Indonesia and Malaysia, the largest rubber producers, may deepen a planned supply reduction this year as the recession curbs consumption, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said July 26.

The three producing countries will cut shipments by as much as 48,000 tons a month in the second half, Latiff said July 15. The trio reduced exports by 540,000 tons in the first five months of the year, more than the 414,000-ton reduction planned for the first half, he said.

Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, dropped 1 percent to 17,630 yuan ($2,580) a ton at 10:41 a.m. local time.

Source: Bloomberg

[Dow Jones] Physical prices of Thai USS3 rubber steady at THB57.71-THB58.58/kg Vs THB57.79-THB58.28/kg due to rain-induced tight supply. “Prices could have risen even higher but for the decline in natural rubber futures, which eased market sentiment,” says Singapore-based importer. Total sales in three central markets of Thailand estimated at 47 tons Vs 78 tons yesterday, says trader in Hat Yai; adds sales comprise 2 tons in Hat Yai, 10 tons in Surat Thani and 35 tons in Chandee. (SAM)

Source: Dow Jones

[Dow Jones] Asian cash rubber prices slightly lower after sharp fall in futures; most sellers still reluctant to bring down their offer prices because of strong fundamentals. “Offer price of Thai rubber suppliers isn”t much different from yesterday because the availability of basic raw material, USS grade rubber, is tight,” says trading executive in Thailand. For daily breakdown of cash prices for all rubber grades, keyword search ASIA PHYSICAL RUBBER PRICES to see the item. (SAM)

Source: Dow Jones

TOKYO, July 29 (Reuters) – Tokyo rubber futures tumbled as
much as 4 percent towards 180 yen on Wednesday, snapping a 10-day
rally that took prices to an 8-½ month high after being
pressured by a dip in oil prices and a firmer yen.
* The Tokyo Commodity Exchange benchmark rubber contract rose
about 24 percent during the 10-day rally that briefly lifted
prices above 190 yen on Tuesday.
* “There was a feeling of achievement in the market after
having touched 190 yen … and then today we have lower oil and a
slightly higher yen to push prices down further,” a Tokyo-based
broker said.
* The key Tokyo Commodity Exchange rubber contract for
January 2010 delivery <0#JRU:>, which debuted on Tuesday, closed
at 181.9 yen, 181.9 yen, down 7.1 yen or about 3.8 percent from
Tuesday after hitting an intra-day low of 181.3 yen, down 7.7 yen
or about 4 percent.
* It rose as high as 190.1 yen on Tuesday, the highest for
any benchmark since Nov. 10, as buying by investment funds
continued on rising risk tolerance amid optimism about the
economic recovery.
* Shuji Sugata, a manager at Mitsubishi Corp Futures and
Securities, said despite a rise in TOCOM trading volume in the
recent rally, most of the transactions were made by investors
seeking short-term returns.
* “The recent rally was led by a rise in non-commercial long
positions. That suggests these positions were mainly built up by
trend-followers,” he said.
* Open interest, a gauge to measure market liquidity, has
been slow to increase relative to a recent rise in daily trading
volume, reflecting the typical attitude of such players to close
out their positions on the same day, he said.
* Tight supply due to rain in some producing countries, which
has disrupted tapping, had partly helped to boost physical rubber
prices.
* Traders based in Thailand said that global tyre makers and
Chinese dealers were looking to buy rubber, amid optimism about
the global economy and improved prospects for demand for the
industrial commodity.
* Physical rubber prices have steadily risen due to tight
fundamentals, traders said.
* U.S. crude futures dropped below $66 a barrel on
Wednesday, extending losses for a second day after a sharp
sell-off in buoyant Chinese shares triggered wider losses in risk
assets. [O/R]
* The U.S. currency inched down 0.2 percent to 94.35 yen.

Source: Reuters

[Dow Jones] Tocom rubber futures settle lower on technical selling but off lows; near-term outlook still positive. “There has been some profit-taking, but fundamentals are still strong,” says trader in Singapore; adds prices may rise above Y190/kg in near-term. Limited supplies, concern over adverse weather are supportive for prices, says exporter in Malaysia. New benchmark January RSS3 contract settles at Y189/kg vs opening price of Y190 after hitting intraday low of Y185.5/kg. (SAM)

Source: Dow Jones