BLBG: Rubber Climbs to Two-Week High as Supply in Thailand Limited, Oil Advances
Rubber climbed to a two-week high after a rally in oil raised the appeal of the commodity as an alternative to synthetic products used in tires and tight supply boosted the Thai cash price to a record.
May-delivery rubber on the Tokyo Commodity Exchange gained as much as 1.2 percent to 374.7 yen per kilogram ($4,523 a metric ton) before trading at 373 yen at 10:45 a.m. The price reached a 30-year high of 383 yen on Nov. 11 and has gained 35 percent this year.
Oil advanced to the highest in 26 months in New York amid optimism fuel demand will increase. Physical rubber prices in Thailand, the biggest producer and exporter, increased to a record on Dec. 3 on a supply shortage, according to the Rubber Research Institute of Thailand. Futures also gained on expectation the Federal Reserve may take more steps to boost economic growth.
“Rubber chased a rally in oil and metals as investor demand for commodities increased amid speculation over U.S. monetary easing,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Futures were also supported by the strength of physical rubber prices.”
Federal Reserve Chairman Ben S. Bernanke said U.S. unemployment may take five years to return to a normal level and that Fed purchases of Treasury securities beyond the $600 billion announced last month are possible.
Bernanke Comments
“At the rate we’re going, it could be four, five years before we are back to a more normal unemployment rate” of about 5 to 6 percent, Bernanke said according to the transcript of an interview aired today on CBS Corp.’s “60 Minutes” program.
Bernanke and other Fed officials have defended the central bank’s announcement that it will purchase $75 billion in Treasury securities a month through June to prop up a recovery so weak that only 39,000 jobs were created in November.
Oil for January delivery added as much as 41 cents to $89.60 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Oct. 7, 2008, before trading at $89.32 at 10:50 a.m. Tokyo time. Higher oil boosts the cost of making synthetic rubber.
The cash rubber price in Thailand climbed to a record on Dec. 3, rising 1.5 percent to 134.05 baht ($4.46) per kilogram, according to the Rubber Research Institute of Thailand. Demand remains strong amid a supply shortage as rain persists in southern Thailand, the institute said. Thailand’s south accounts for 80 percent of output.
Gains in rubber futures were limited amid concern that China, the world’s largest user, may take additional steps to curb inflation and slow growth, Saito at Fujitomi said.
China will probably raise interest rates by 75 basis points in the next seven months and the yuan’s appreciation will “likely be quick” in the next three to five months, Deutsche Bank said in a report.
May-delivery rubber in Shanghai gained 0.8 percent to 32,615 yuan ($4,903) a ton at 9:42 a.m. local time. The price reached a record 38,920 yuan on Nov. 11.
China’s natural-rubber inventories dropped for the first time in 10 weeks, declining 6,665 tons to 55,346 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the bourse said on Dec. 3.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net;
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
