Rubber Posts Best Weekly Gain Since October as Output Drops

Rubber Posts Best Weekly Gain Since October as Output Drops

Dec. 4 (Bloomberg) -- Rubber advanced for a fifth day and posted the largest weekly gain since October as shippers in Thailand, the world’s largest producer and exporter, boosted prices after rain curbed production.
Futures in Tokyo gained 8.8 percent this week, the best performance since the week ended Oct. 23. Thai exporters increased prices of so-called RSS-3 grade rubber for January shipment to $2.80 a kilogram today from $2.70 on Dec. 1, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.
“Rain continued to hinder tapping in major producing areas in Thailand, leading to an increase in the raw material prices,” Shigemoto said by phone today.
Rubber for May delivery, the most-active contract, rose as much as 1.2 percent to 263.8 yen per kilogram ($2,993 a metric ton), the highest since September 2008, before closing at 262.5 yen on the Tokyo Commodity Exchange.
Natural rubber output in Thailand may drop 6.5 percent from a year earlier to 2.9 million tons this year as rainfall disrupted plantation work and hurt the raw material quality, Shigemoto said. Prapas Euanontat, secretary-general for the Thai Rubber Association, forecast Nov. 17 that output will drop to as low as 2.7 million tons from 3.1 million tons last year.
The decline comes as demand for rubber is recovering on increased car sales in the U.S., Japan and China, stoking speculation production may fall short of demand, Shigemoto said.
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, according to data from industry researcher Autodata Corp this week.
Economic Recovery
Gains in rubber futures were limited after an unexpected contraction in American service industries raised concern the economic recovery may be faltering.
Asian stocks declined after the Institute for Supply Management in the U.S. said yesterday its gauge of non- manufacturing businesses dropped to 48.7 last month, below economists’ estimates and the reading of 50 that indicates growth.
Gains in rubber futures were also curbed as oil declined for a third day, reducing the appeal of the commodity as an alternative to synthetic rubber. Crude oil dropped below $76 a barrel and is poised for a weekly decline.
Rubber for March delivery on the Shanghai Futures Exchange added 0.8 percent to settle at 22,445 yuan ($3,287) per ton.