Rubber advanced to a two-week high on speculation that demand in China, the world’s largest consumer, will keep growing after Sumitomo Rubber Industries Ltd. said it will expand tire output in the nation.

Futures in Tokyo climbed as much as 2.1 percent to the highest level since July 12. The price has gained 1.4 percent in July, heading for the first monthly advance since March.

Sumitomo Rubber, Japan’s second-largest tire maker after Bridgestone Corp., will invest $297 million to set up a factory in Hunan province, the company said in a statement yesterday. It will be the company’s second factory in China and start production in July 2012, it said.

“The news added to expectations that China’s raw-material demand will continue to grow, backed by a rapid expansion in the nation’s economy,” Hisaaki Tasaka, an analyst at broker ACE Koeki Co. in Tokyo, said today by phone.

January-delivery rubber increased as much as 5.7 yen to 274.3 yen per kilogram ($3,138 a metric ton) on the Tokyo Commodity Exchange before settling at 272.9 yen.

Gains in futures were limited as Asian stocks extended a global decline after the Federal Reserve said U.S. economic growth slowed in some areas, raising concern that the recovery of the world’s largest economy may weaken.

“Economic activity has continued to increase, on balance, since the previous survey,” the central bank said in its Beige Book business survey, noting that two of the Fed’s 12 districts reported the economy “held steady” and two said the pace of expansion slowed.

‘Unusually Uncertain’

The report underscored the Fed’s view that the recovery, while still moving forward, is progressing at a slower pace than earlier in the year. Fed Chairman Ben S. Bernanke said in congressional testimony last week that the central bank expects “continued moderate growth” and noted that the economic outlook remains “unusually uncertain.”

Low inventory levels in China and Japan continued to provide support to rubber prices, said Roka Komiya, a rubber trader at Marubeni Corp. in Singapore. “That is the factor driving gains of nearby contracts,” he said.

In the cash market, Thai prices extended gains as heavy rains in the nation’s rubber-growing southern provinces limited supply, according to the Rubber Research Institute of Thailand. The price rose 1 percent to 103.4 baht ($3.21) per kilogram.

January-delivery rubber on the Shanghai Futures Exchange gained 1.8 percent to close at 23,735 yuan ($3,503) a ton.

Source: Bloomberg

Rubber advanced to the highest level in more than two weeks on speculation that demand may climb as Asian equity markets gained and the Japanese currency declined.

Futures climbed as much as 2.8 percent to 270.8 yen per kilogram ($3,082 a metric ton), the highest level since July 12, as the MSCI Asia Pacific Index rose for a fourth day on optimism that corporate earnings may improve.

“Rallies across the Asian markets spilled over to commodities, including rubber,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

January-delivery rubber settled at 268.6 yen per kilogram on the Tokyo Commodity Exchange. November-delivery rubber on the Shanghai Futures Exchange rose 3.1 percent to 22,875 yuan ($3,374) a ton.

“A weaker yen supported the rubber market,” Kazunori Kokubo, general manager of the international business department at commodity broker Yutaka Shoji Co., said by phone from Tokyo.

The currency weakened to 88.08 against the dollar from 87.90 yesterday, making the yen-denominated rubber contract more attractive for holders of other currencies.

Prices also climbed on speculation that low stockpile levels in China and Japan may prompt buyers to replenish inventories, Kokubo said.

Short Positions

“Warehouse stock in Japan is still very low and investors who hold short positions are worried about higher prices, prompting them to cover,” Kokubo said, referring to bets that prices would fall.

Data from the Tokyo exchange showed last week that natural- rubber stockpiles monitored by the bourse dropped 29 percent to 1,341 tons as of July 10. That’s the lowest level since at least 2001, according to exchange spokesman Seiki Ichimura.

Natural-rubber stockpiles in China decreased 2,046 tons to 19,328 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said on July 23.

Cash prices advanced, tracking gains on the Tokyo market, and as heavy rains in southern Thailand may limit supply, the Rubber Research Institute of Thailand said on its website today. The price added 0.2 percent to 102.40 baht ($3.18) per kilogram.

Source: Bloomberg

[Dow Jones] Asian physical rubber prices steady, with some buyers on sidelines–awaiting stronger cues later this week, says Phuket-based trader. Thailand”s RSS3 sold at $3,180/ton, CIF, for August shipment to China; STR20 CV traded at $3,070/ton, FOB, for September shipment. Indonesia”s SIR20 sold at around $2,940/ton, FOB, for October shipment. Malaysia”s SMR20 changed hands at $2,965/ton, FOB, for October shipment.

Source: Dow Jones

[Dow Jones] Tocom rubber futures settle higher as yen”s gains ease, crude rallied overnight; Shanghai rubber supports. Tocom July spot contract surges, settles Y40 or 11.2% higher at Y397.2/kg as investors cover short positions ahead of contract”s expiry Monday; although Thai production increasing, Japan”s rubber stocks low, August contract may also see similar short covering near expiry next month, says Tokyo-based Kaname Gokon, deputy general manager at commodity brokerage Okato Shoji Co.”s research division. August to December contracts post smaller price increases below Y10 at settlement; forward contracts likely to move sideways next week; overall volumes thin recently as investors on sidelines, unwilling to sell short as inventory levels low in Japan, also not willing to set up long positions as expecting Thai production to increase, yen weighs, adds Gokon. Benchmark December rubber contract settles Y8.3 or 3.2% higher at Y265.6/kg, near intraday high of Y266.2/kg.

Source: Dow Jones

[Dow Jones] Tocom rubber futures settle 2.4% lower after dipping to week-low of Y256.7/kg as yen hits week-high against dollar after Fed Chairman Bernanke”s downbeat assessment of U.S. economic outlook; crude also down. Only spot July contract up; on short covering. Strong yen weighs on Tocom, which may see further long liquidation if currency continues to gain, says Tokyo-based analyst. Yen may strengthen even more, say currency traders. Benchmark December rubber contract settles Y6.2 lower at Y257.3/kg.

Source: Dow Jones