Rubber Climbs to 15-Month High as Demand May Gain on Recovery

Rubber Climbs to 15-Month High as Demand May Gain on Recovery
Dec. 17 (Bloomberg) -- Rubber advanced for a second day to the highest in almost 15-months after the Federal Reserve said the economy is strengthening, enhancing speculation demand for the commodity used in tires will increase.
Futures in Tokyo rose as much as 3.8 percent, extending yesterday’s 4.2 percent rally, the best performance in four months. Prices also gained as the Fed repeated its pledge to keep interest rates “exceptionally low” for “an extended period,” boosting speculation investors will increase their holdings of commodities as an alternative asset, said Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd.
“Investors are seeking to buy commodities, especially those backed by tight fundamentals,” Sugata said by phone today. “Rubber may be their choice as its demand is boosted by rising car sales in China.”
Rubber for May delivery climbed to as high as 273.8 yen per kilogram ($3,043 a metric ton), the highest level since Sept. 29, 2008, before trading at 270.6 yen on the Tokyo Commodity Exchange at 12:02 p.m. local time. Prices rose as much as 10 yen, triggering an exchange trading circuit breaker for a second day.
Rubber for March delivery on the Shanghai Futures Exchange climbed by as much as 4.1 percent to 23,280 yuan ($3,409) a ton, the highest level since August last year. The contract traded at 22,870 yuan at 11:02 a.m. local time.
China Tariffs
Prices rallied after China’s Ministry of Finance said it will cut tariffs on natural rubber imports next year, stoking speculation Chinese purchase of the commodity will increase.
The so-called temporary tariff rate for ribbed smoked sheet rubber will be set at 20 percent of the import price or 1,600 yuan ($234) a metric ton, whichever is lower, the ministry said yesterday. The tariff rate for technically specified rubber is to be set at 20 percent of the imported price or 2,000 yuan per ton, it said.
Rubber futures in Tokyo have almost doubled this year as China, the world’s largest consumer, led a recovery in demand under the government’s stimulus measures that boosted the nation’s car sales to a record.
China’s full-year auto sales may be about 13 million, according to Booz & Co., which advises carmakers and investors in China. By 2015 output in the country may reach 15 million, according to Koji Endo, managing director of Advanced Research Japan in Tokyo.

IN INDIA Spot rubber flares up on global cues
Kottayam: The domestic rubber market made another sharp come back on Wednesday. In spot, the prices flared up in tandem with the gains on NMCE and international rubber futures.

Sheet rubber increased to Rs 137 from Rs 133 a kg on fresh buying and short covering. There was no selling pressure even at higher levels and according to sources the market is expected to hit Rs 150 a kg for sheet rubber shortly.

Futures improve

The January futures improved sharply to Rs 139.75 (135.20), February to Rs 141.50 (137.21), March to Rs 143.43 (138.91) and April to Rs 145.55 a kg for RSS 4 on National Multi Commodity Exchange (NMCE). The December futures firmed up to ¥252 (¥242.1) (Rs 131.17), January to ¥253 (¥242.7), February to ¥254.8 (¥244.4) and March to ¥257.8 (¥247.1 a kg for RSS 3 during the day session on Tokyo Commodity Exchange. RSS 3 closed firm at Rs 130.53 (126.79) a kg on Singapore Commodity Exchange (SICOM). The grade moved up to Rs 128.87 (127.85) a kg at Bangkok. (BL)
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