May 31 (Bloomberg) — Rubber advanced for a fourth day, paring a monthly loss, as low supplies from major producers and a rally in crude oil enhanced the appeal of the commodity used to make tires.

Futures in Tokyo extended two weeks of gains amid concerns that supplies may not be adequate to meet growing demand. Crude oil rose for third time in four days after the dollar fell against the euro, bolstering the appeal of commodities as a hedge against inflation.

“Supplies remain low,” Chaiwat Muenmee, an analyst at broker DS Futures Co., said by phone from Bangkok. “Coupled with rising oil prices, it helped boost gains on Tocom.”

Depleted supply after the end of the annual February-to- April low-production season, together with robust demand in Asia, will support the market, the Association of Natural Rubber Producing Countries said in its May newsletter.

Demand from China, India and Malaysia, which account for more than 45 percent of global consumption, should stay strong, the association said.

Rubber for November delivery, the most-active contract, rose as much as 0.8 percent to 287.2 yen per kilogram ($3,142 a metric ton) before settling at 285.1 yen on the Tokyo Commodity Exchange. It fell as much as 1.2 percent earlier.

“The market remains capped by concern that Europe’s debt crisis will stall economic recovery,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today.

Debt Concerns

Still, the most-active contract dropped for a second month, losing 2.7 percent, after investors reduced holdings of risky assets amid concern that Europe’s debt crisis will spur governments to reduce spending, slowing the region’s economic recovery. The yen fell to a one-week low after Japan’s Social Democratic Party left the three-way coalition government.

Fitch Ratings cut Spain’s AAA credit rating by one level last week, saying the nation’s debts will likely weigh on growth. Spain has the third-largest budget deficit in the euro region, where policy makers have pledged almost $1 trillion of loans to support the weakest economies and the regional currency. The rating cut for Spain increased concern that raw material demand in Europe may slow.

“A sense of caution is increasing,” said Norikazu Kitta, a strategist at Nikko Cordial Securities Inc. “Financial issues in Europe are spreading.”

Rubber cash prices in Thailand, the largest exporter, extended gains as increasing demand outpaced supply, the Rubber Research Institute of Thailand said on its website today.

Thai RSS-3 grade rubber for June delivery added 0.8 percent to 126.40 baht ($3.89) a kilogram today.

September-delivery rubber on the Shanghai Futures Exchange dropped 0.5 percent to settle at 22,845 yuan ($3,346) a ton.

Source: Bloomberg

Rubber climbed for a third day and booked the largest weekly gain since December as a rally in oil raised the appeal of the commodity and an advance in equities boosted investor interest in risk assets.

Futures in Tokyo advanced as much as 2.6 percent to the highest level since May 6. The price has climbed 6.8 percent this week, the best performance since the week ended Dec. 18.

Oil was poised for its first weekly gain in four weeks after China affirmed its commitment to investing in Europe and U.S. reports signaled that energy demand may recover with an economic rebound. Asian stocks climbed for a third day, after China said a report that it was reviewing foreign-exchange holdings of euro assets was “groundless.”

“Sales spurred by Europe’s debt concern have subsided after the report from China,” Hisaaki Tasaka, an analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. “Rubber tracked a recovery in oil and stocks.”

Rubber for November delivery, the most-active contract, gained as much as 7.3 yen to 288.6 yen per kilogram before settling at 284.8 yen on the Tokyo Commodity Exchange.

The price may surpass the 2008 peak of 356.9 yen per kilogram this year to reach the highest level since March 1980, Kazuya Tetsu, executive manager at Tokyo-based broker Yutaka Shoji Co., said in an interview yesterday.

Market Direction

“China’s influence on the market and global economies is getting stronger,” Tetsu said. Demand from the country “is setting the market’s direction,” he said.

The European debt turmoil, which triggered a selloff of the raw material this month, may force governments to keep interest rates low and delay implementation of their “exit policy,” leading to renewed investor interest in commodities as an inflation hedge, he said.

Crude rose 4.3 percent yesterday to settle at $74.55 and was little changed today. The MSCI Asia Pacific Index gained 1.5 percent to 113.36, extending a global rally.

“Investors’ concerns are mitigated by China’s intention to invest in Europe,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

Futures also increased after cash rubber prices in Thailand, the largest producer and exporter, increased. Thai prices extended gains as rain in some southern provinces disrupted tapping, lowering supply, the Rubber Research Institute of Thailand said on its website.

Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram yesterday, according to the institute. Thailand’s market is closed today for a public holiday.

September-delivery rubber on the Shanghai Futures Exchange added 1.4 percent to settle at 22,905 yuan ($3,353) a ton.

Source: Bloomberg

Rubber may climb at least 25 percent to the highest level in three decades as demand increases in China, the largest consumer, outweighing concern European use will slow, said an executive manager at broker Yutaka Shoji Co.

Futures may surpass the 2008 peak of 356.9 yen per kilogram ($3,922 a metric ton) on the Tokyo Commodity Exchange this year to reach the highest level since March 1980, said Kazuya Tetsu, who traded the commodity for more than 30 years at Marubeni Corp. before joining Yutaka Shoji last month.

Prices gained 3.6 percent this year after doubling in 2009 as the rally slowed on concern the sovereign debt crisis in Europe will stall the economic recovery, hurting demand for commodities. Car ownership in China, the world’s largest auto market, will expand, boosting consumption of the raw material used in tires, Tetsu said in an interview in Tokyo.

“China’s influence on the market and global economies is getting stronger,” Tetsu said yesterday. Demand from the country “is setting the market’s direction,” he said.

Rubber for November-delivery, the most-active contract in Tokyo, gained 1.8 percent to 286.20 yen at 2:17 p.m. local time today. The price reached a five-month low of 250.9 yen on May 17, down from a peak of 338.5 yen about a month earlier.

A price jump will benefit producers in Thailand, Indonesia and Malaysia, the biggest suppliers, and potentially boost costs for tire makers such as Bridgestone Corp. Marubeni is the country’s biggest trader of the commodity and Yutaka is one of the top five raw-materials brokerages.

Inflation Hedge

The European debt turmoil may force governments to keep interest rates low and delay implementation of their “exit policy”, leading to renewed investor interest in commodities as an inflation hedge, Tetsu said. Europe represented 15 percent of global consumption estimated at 10.2 million tons in 2008, according to International Rubber Study Group.

Sales of cars, sport-utility vehicles and multipurpose vehicles in China jumped 33 percent from a year earlier to 1.11 million units in April, according to the China Association of Automobile Manufacturers. In the first quarter sales jumped 76 percent to 3.52 million units.

Consumption of natural rubber in China may grow 10 percent this year to 3.35 million tons from 2009, the Association of Natural Rubber Producing Countries said in its May report.

Supplies of natural rubber may increase seasonally, helping curb prices on the cash market, Kazunori Kokubo, general manager at the international business section of Yutaka Shoji, said in the same interview.

Narrow Gap

“Tightness in supply will probably be alleviated in July as the influence from wintering will diminish,” he said. Trees shed their leaves during wintering, or the low-production period that runs from February to April, leading to lower latex output.

The increase in production may narrow the price gap between the nearby month on the Tokyo exchange and the most active contract, Kokubo said. June-delivery rubber added 1 percent to 373 yen at 2:06 p.m. local time.

Total production of natural rubber will grow 6.2 percent to 9.37 million tons this year, according to the ANRPC report. The association represents Cambodia, China, India, Malaysia, Indonesia, Papua New Guinea, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Cash prices in Thailand, the largest producer and exporter, increased as rains in southern provinces disrupted tapping, according to the Rubber Research Institute of Thailand. Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram, the institute said on its website yesterday. The price climbed to a record 130.55 baht April 27.

Source: Bloomberg

May 27 (Bloomberg) — Rubber advanced for a second day to the highest level in three weeks as a rally in crude oil and limited supplies from Thailand, the largest producer, boosted demand for the commodity used to make tires.

Futures in Tokyo were also bolstered by a fall in Japan’s currency against the dollar, which raised the appeal of yen- denominated contracts. The yen weakened as signs that Asia- Pacific economies are recovering sapped demand for Japan’s currency as a refuge.

“Overall sentiment is bullish” given the gains in oil and other commodities, Kazunori Kokubo, general manager of the international business department at commodity broker Yutaka Shoji Co., said by phone from Tokyo.

Rubber for November delivery, the most-active contract on the Tokyo Commodity Exchange, rose as much as 3 percent to 281.90 yen per kilogram ($3,122 a metric ton) before settling at 281.3 yen. Earlier, it fell to 272 yen on concerns that Europe’s debt crisis may stall economic recovery in the region.

Oil futures in New York climbed as much as 1.5 percent, boosting the cost of making synthetic rubber from naphtha. The yen declined to 110.54 per euro as of 6:40 a.m. in London from 109.47 in New York yesterday.

The most-active rubber contract gained 5.5 percent this week, a second weekly gain, amid worries that there’s continued tight supply from major producing countries. The “supply situation hasn’t improved,” Kokubo said.

Tight Supply

The low supply from key producers together with robust demand in Asia will keep the market strong, the Association of Natural Rubber Producing Countries said in its May newsletter on May 25. Demand from China, India and Malaysia, which account for more than 45 percent of global consumption, should stay robust, the association said.

Cash prices in Thailand, the largest exporter, extended gains as rains in some southern provinces disrupted tapping, lowering supply, the Rubber Research Institute of Thailand said on its website today. Processers continued purchases on worries there’s a supply shortage, it said. Thai RSS-3 grade rubber for June delivery rose 1.6 percent to 125.40 baht ($3.85) a kilogram.

September-delivery rubber on the Shanghai Futures Exchange added 0.8 percent to settle at 22,585 yuan ($3,306) a ton.

Source: Bloomberg

SINGAPORE (Dow Jones)–Natural rubber”s supply and demand fundamentals remain strong, and the market has “taken a recovery path” despite a drop in prices since the start of this month and the end of wintering, the Association of Natural Rubber Producing Countries said in a monthly report Tuesday.

“Demand for natural rubber remains strong despite woes and worries clouding expectations for global economic recovery,” ANRPC said.

Preliminary estimates up to last month indicated that demand remained strong in major consumers China, India and Malaysia, the association said. In top consumer China, imports of natural and compound rubber rose 17.3% and 42.7% respectively.

“It is striking to notice that these robust rates have been attained in spite of a section of tyre manufacturing industry staying away from the market expecting a lower price after the wintering season. This means that the real demand is yet to be felt in the market,” it said.

Source: Dow Jones