Tuesday, December 15, 2009

Rubber Gains on Speculation Economic Recovery to Raise Demand

Rubber Gains on Speculation Economic Recovery to Raise Demand
Dec. 15 (Bloomberg) -- Rubber gained for a third day on speculation the recovery in global economies will boost demand for the commodity used in tires.
Futures in Tokyo climbed as much as 2.1 percent to the highest level since Dec. 9, extending the 1.9 percent gain in the previous two days. Reports this week are expected by economists to show industries in the U.S. boosted production and housing starts rebounded.
“Local investors bought the futures on speculation the commodity will benefit from the global economic recovery,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone.
Rubber for May delivery, the most-active contract, gained as much as 5.3 yen to 253.7 yen per kilogram ($2,862 a metric ton) on the Tokyo Commodity Exchange before trading at 252.2 yen at 10:44 a.m. local time.
U.S. industrial output rose 0.5 percent in November following a 0.1 percent increase in the previous month, according to a Bloomberg News survey before a Federal Reserve report today.
“Underlying risk appetite remains intact as credit fears wane and the economy looks to be on the mend,” said Minoru Shioiri, Tokyo-based chief manager of foreign-exchange trading at Mitsubishi UFJ Securities Co.
Thai Supply
Gains in rubber futures were limited as improved weather in producing areas in Thailand, the world’s largest exporter, eased concern that supply from the country may fall short of demand, Saito at Fujitomi said.
Thai shippers offered so-called RSS-3 grade rubber for January shipment at around $2.7 a kilogram today, little changed from Dec. 11, Saito said. Latex output is recovering after rain subsided, he added.
Rubber climbed to a 14-month high of 264.7 yen on Dec. 7 on speculation that heavy rain would slash Thai output, leading to a shortage in the global market as China, the largest consumer, leads a recovery in demand. Flooding hit four provinces in southern Thailand in late November. The situation is back to normal, according to the Royal Irrigation Department.
Rubber plantations in the four Thai provinces affected by flooding account for about 20 percent of the country’s total plantation area of about 2.7 million hectares (6.7 million acres), according to the Rubber Research Institute of Thailand.
Rubber for March delivery on the Shanghai Futures Exchange added 1.1 percent to 21,745 yuan ($3,184) a ton at 9:56 a.m. local time.

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