Rubber futures climbed, led by a rally in the nearby contract amid speculation that low stockpiles in Japan may make physical delivery difficult at its expiry this month.

Futures in Tokyo gained for the second time this week. The nearby contract, which will expire on July 26, jumped as much as 2.8 percent, widening the price differential with the December- delivery futures, the most-active contract.

Natural rubber stockpiles monitored by the Tokyo Commodity Exchange dropped by 6.2 percent to 1,880 metric tons on June 30, nearing a record low of 1,408 tons reached in October 2008, according to exchange spokesman Seiki Ichimura. Supply decreased after rain disrupted tapping in Thailand, the world’s largest producer and exporter, said Kazuhiko Saito, an analyst at Tokyo- based broker Fujitomi Co.

“Tight supply is spurring a short-covering rally,” Saito said by phone today. Speculators with short, or sell, positions in the July contract must buy them back by July 26, the expiry date, unless they can deliver the raw material.

December-delivery rubber gained as much as 1.6 percent to 266.5 yen per kilogram ($3,056 a ton) before settling at 263.9 yen on the Tokyo Commodity Exchange. The price lost 3.3 percent this week, the second drop in three weeks.

July-delivery rubber gained as much as 2.8 percent to 357.5 yen before settling at 355 yen. Last month, the June-delivery contract expired at 372 yen.

Gains in futures were limited amid concern that a slowdown in economic growth in China, the largest consumer, may curb demand for the commodity used in tires, Saito at Fujitomi said.

Economic growth in China slowed to 10.3 percent in the second quarter from 11.9 percent in January-March, data showed yesterday. China’s expansion eased after the government tempered credit expansion, investment spending and property speculation.

November-delivery rubber on the Shanghai Futures Exchange gained 0.8 percent to 21,525 yuan ($3,177) a ton at 2:53 p.m. local time.

Source: Bloomberg

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