Rubber Advances to Four-Week High as Oil Rallies, Yen Weakens Share Business

Rubber Advances to Four-Week High as Oil Rallies, Yen Weakens Share Business

Feb. 17 (Bloomberg) -- Rubber advanced to the highest level in almost four weeks as a rally in oil and a drop in the Japanese currency raised the appeal of yen-based contracts for the commodity used in tires.

Futures in Tokyo rose as much as 4 percent to the highest level since Jan. 22. Oil climbed the most in more than four months yesterday, boosting the cost of making rival synthetic rubber, as the dollar’s drop against the euro made the commodity more attractive as an alternative asset.

The market rallied after Greece’s finance minister said yesterday his nation won’t need a European Union bailout, sparking gains in global shares and reducing demand for the Japanese currency as a refuge. Greece’s tax collectors called off a strike, easing concerns that unions may block spending cuts aimed at shrinking the EU’s biggest budget deficit.

“Rubber chased a rally in oil and metals as concern about Greece’s debt problem eased, spurring investors to buy risk assets,” Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

Rubber for July delivery, the most-active contract, rose as much as 11.6 yen to 298.5 yen per kilogram ($3,305 a metric ton) before settling at 298.1 yen on the Tokyo Commodity Exchange.

Crude oil for March delivery traded at $77.08 a barrel, 7 cents higher, on the New York Mercantile Exchange at 3:28 p.m. Singapore time. Yesterday, the contract rose 3.9 percent to $77.01, the biggest percentage gain since Sept. 30.

Currency Moves

The rally in oil “spills over to the rubber market,” Pornthip Wongjirattikarn, marketing manager at Future Agri Trade Co., said by phone from Bangkok. A weakening yen also boosts demand for the commodity, Pornthip said.

The yen traded at 90.28 per dollar at 3:08 p.m. Singapore time from 90.14 in New York yesterday. The euro traded at $1.3741 from $1.3770 yesterday, when it reached $1.3779, the highest since Feb. 11.

Greece’s Finance Minister George Papaconstantinou said after a meeting of finance ministers in Brussels that “there’s no actual need for a bailout.” The Reuters/Jefferies CRB index of 19 raw materials climbed to the highest level since Jan. 26.

Rubber also gained as output in Thailand, the world’s largest exporter, is set to decline, Shigemoto said. During wintering, or the low-production season that normally begins in the nation’s main growing areas in February, trees shed their leaves and latex output slows.

In the cash market, Thai shippers have raised offers for so-called RSS-3 grade rubber for April shipment to about $3.08 a kilogram from $3 on Feb. 12, Shigemoto said.

“Supplies are quite thin these days as traders set aside some stocks for the dry period in March and April,” Future Agri’s Pornthip said.

The price of unsmoked sheets gained 2 percent to 98.38 baht ($2.97) per kilogram. Ribbed smoked sheets advanced 2.5 percent to 102.55 baht a kilogram, the Rubber Research Institute of Thailand said on its Web site today.

The Shanghai Futures Exchange is closed this week for the Lunar New Year holidays.