By Supunnabul Suwannakij June 23 (Bloomberg) -- Rubber advanced on expectations of Chinese buying as stockpiles fall and supplies from Thailand, the largest grower, increase at a slower pace than expected. Futures in Tokyo climbed as much as 0.5 percent after falling 1.4 percent earlier today. The most-active contract is heading for a second weekly gain amid optimism that Europe’s sovereign-debt crisis may not substantially weaken demand for the commodity used to make tires and gloves. “Heavy rainfall in southern Thailand has sparked worries that supplies may not be as much as expected,” Varut Rungkhum, analyst at commodity broker Agro Wealth Ltd., said by phone from Bangkok. “Low stockpiles in China also boosted optimism the biggest buyers will soon start building inventories.” Rubber for November-delivery gained as much as 1.5 yen to 279.1 yen per kilogram ($3,083 a metric ton) before trading at 277.7 yen on the Tokyo Commodity Exchange as of 12:16 p.m. local time The November-delivery contract on the Shanghai Futures Exchange gained 0.7 percent to 21,640 yuan ($3,177) a ton. Natural rubber inventories fell 1,440 tons to 16,441 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said June 18. It is the lowest level since 2003, according to data compiled by Bloomberg. China, the world’s largest auto market, is the biggest user of natural rubber. The nation may increase gross imports of the raw material to 1.68 million tons this year, from 1.59 million in 2009, according to a May report from the Association of Natural Rubber Producing Countries. Thai Supplies “Nearby contracts will probably stabilize as production from Thailand will increasingly come onto the market,” Katsumi Kinoshita, senior manager for Institutional Department, Orion Koeki Co. Ltd., said by phone from Kobe. Rubber for June-delivery gained as much as 0.9 percent, or 3 yen, to 357 yen per kilogram on the Tokyo Commodity Exchange. Global rubber output may total 9.7 million to 10.2 million tons this year as drought and heavy rainfall in key producing countries including Thailand and Indonesia damage supply, Stephen Evans, the secretary-general of the International Rubber Study Group, said in an interview last week. That compares with the group’s forecast range of 10.1 million to 10.6 million tons on March 17. Demand will probably increase by 4.4 percent this year to 9.8 million tons, based on the assumption that the economic recovery will slow, Evans said. The group forecast 10.2 million tons in March. To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

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