Rubber Gains to 14-Month High on Demand Recovery, Output Cuts Share Business

Rubber Gains to 14-Month High on Demand Recovery, Output Cuts Share Business
Dec. 2 (Bloomberg) -- Rubber climbed to a 14-month high on speculation that demand for its use in tires will increase as the global economy recovers and as heavy rain reduces supplies from Thailand, the world’s largest producer.

Futures in Tokyo gained as much as 3.2 percent today to the highest level since Oct. 2 last year as Asian stocks rose for a third day, gold advanced to a record and auto sales rose last month. Shippers in Thailand increased natural rubber prices after rain and flooding curbed production.

“It’s not a market easy to sell as stocks rose, most commodities jumped and car sales increased,” said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co. “Heavy Rain in Thailand has caused concern over production cuts.”

Rubber for May delivery, the most-active contract, added as much as 7.9 yen to 257.2 yen per kilogram ($2,946 a metric ton) on the Tokyo Commodity Exchange. It closed at 255.6 yen.

The MSCI Asia Pacific Index rose 0.5 percent to 120.12, set for its highest close since Oct. 21. The gauge has gained 5.5 percent in the past three days amid optimism the region’s companies will be sheltered from losses related to Dubai World, which is seeking to restructure its debt payments.

Record Gold

Spot gold climbed as much as 1.6 percent to a record $1,215.85 an ounce before trading at $1,213.98 by 3:36 p.m. Tokyo time. The London Metal Exchange Index, a measure of six industrial metals including copper and zinc, climbed 1.9 percent yesterday, its steepest increase in two weeks, and crude oil gained 1.4 percent to $78.37 a barrel, the highest settlement since Nov. 18.

Hyundai Motor Co. and Nissan Motor Co. led the first monthly gain in U.S. auto sales without government stimulus in November, signaling buyers are returning to showrooms as the economy stabilizes.

Nissan’s sales rose 21 percent and Seoul-based Hyundai reported a 46 percent surge, industry researcher Autodata Corp. said. Toyota Motor Corp. posted a 2.6 percent increase, higher than analysts’ estimates. The annual sales rate was 10.93 million vehicles, up from 10.41 million a year earlier, when seasonally adjusted for two fewer sales days in November 2009, according to Autodata.

The results add to evidence that a gradual economic recovery is taking hold, after the deepest recession since the Great Depression led to the bankruptcies of General Motors Corp. and Chrysler Group LLC. Sales in August were boosted by the government’s “cash for clunkers” program.

Rubber output from Thailand may fall “about 10 percent” this year as heavy rainfall disrupts production, according to the Thai Rubber Association. Output will be 2.7 million to 2.8 million tons in 2010 compared with 3.1 million tons in 2008, Prapas Euanontat, the association’s secretary-general, said Nov. 17. Yields also fell as fertilizer costs rose, curbing use, he said.

Rubber for March delivery on the Shanghai Futures Exchange gained 1.3 percent to 22,015 yuan ($3,225) a ton.