Rubber Jumps to 20-Month High as Thai Price Rallies to Record

April 5 (Bloomberg) -- Rubber surged to a 20-month high as prices in Thailand, the biggest exporter, may extend a record- breaking rally on low supply, and as U.S. jobs data enhanced optimism that the economic recovery will boost demand for the commodity used in tires.

Futures in Tokyo gained as much as 2.7 percent to 326.8 yen per kilogram ($3,456 a metric ton), the highest level since Aug. 1, 2008, extending a 10 percent jump in the past two weeks.

Prices in Thailand may rise to 120 baht ($3.71) a kilogram in the next two months as demand increases and supplies decline because of a drought,Supachai Phosu, deputy minister of agriculture and cooperatives, said on April 2. U.S. employers added the most jobs in three years, data showed the same day, boosting optimism that an economic recovery will raise demand for rubber.

“The market is in a bullish mood because of tight supply from Thailand and positive economic data from the U.S.,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Futures may extend gains if Thai prices continue to rally.”

Rubber for September delivery settled at 326.6 yen on the Tokyo Commodity Exchange.

Prices of ribbed smoked sheet rubber in Thailand may keep rising as drought lowers latex levels, while demand remains strong, Supachai said.

“The forecast provides positive psychological sentiment to the market, which helped drive the Tokyo prices higher,” said Chaiwat Muenmee, an analyst at DS Futures Co. from Bangkok.

The free-on-board price of RSS-3 grade rubber for delivery in May reached a record 116.55 baht per kilogram, according to the Rubber Research Institute of Thailand. Latex output falls as the nation is in the low-production season, known as wintering, when rubber trees shed their leaves and producers reduce tapping.

Output Declines

Supplies from Thailand are equivalent to about 60 metric tons per day, compared with a daily average of 200 tons during the high-production period, Chaiwat said Friday.

U.S. payrolls rose by 162,000 last month, less than anticipated, after a revised 14,000 decrease in February that was smaller than initially estimated, figures from the U.S. Labor Department showed on April 2. The March increase included 48,000 temporary workers hired by the government to help conduct the 2010 census. The unemployment rate held at 9.7 percent.

“It’s a good, solid report,” Treasury Secretary Timothy F. Geithner said in a Bloomberg Television interview in New York on April 2. “It shows we’re getting stronger and the economy is now creating jobs.”

The Shanghai Futures Exchange is closed today for a holiday. Natural rubberinventories fell 11,063 tons to 63,157 tons, the lowest level since August 2009, the bourse said on April 2, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

“Chinese buyers reduced rubber purchases because of higher prices, leading to a drawdown in inventories,” Saito at Fujitomi said.

India Rubber Imports More Than Double on Tire Demand

April 6 (Bloomberg) -- Natural rubber imports by India, the fourth-biggest producer, more than doubled last year after tire- makers boosted output to meet increased demand from auto makers, the state-owned Rubber Boardsaid.

Purchases surged to 170,048 metric tons in the year ended March 31, from 77,762 tons a year earlier, the board said in an e-mailed statement today. Rubber demand expanded 6.8 percent to 930,565 tons in the period, it said.

Natural rubber prices in India reached a record yesterday on concern that the low-output season in the largest producing nations will worsen a deficit.Bridgestone Corp. said last month it will spend 50 billion yen ($540 million) on a second plant in India, joining local rivals Apollo Tyres Ltd. and Ceat Ltd. in adding capacity to benefit from rising automobiles sales.

“The tire industry is booming at a time when rubber output is headed down,” Geevergees P.V., general manager at Periyar Latex Ltd., a rubber trader, said by phone from Kottayam in the southern state of Kerala. “Imports will continue to rise as tire companies expand capacity and prices will further climb.”

Rising salaries in the world’s second-fastest growing major economy may more than double annual car sales to 3 million by 2015, the government forecast in 2006. That has prompted Ford Motor Co., Volkswagen AG and other automakers to expand plants and introduce new vehicles in the country.

“Tire makers will find it hard to secure all their needs in India,” Geevergeese said. “Rubber yields are going down because of global warming.”

Tire makers may boost imports to 200,000 tons this year, he said. Rubber prices may jump 25 percent to 200 rupees a kilogram from a record 160.55 rupees a kilogram yesterday, he said.

Tire Prices

Higher costs have prompted manufacturers including Apollo and JK Tyre & Industries Ltd. to raise prices for a second time this year, and their shares are among the best-performers on the country’s stock exchanges.

Apollo Tyres has more than tripled in the past year and JK Tyre has surged almost five times in the period. Ceat has jumped almost fourfold, according to the data on Bloomberg.

Futures in Tokyo today advanced to 329.2 yen per kilogram ($3,497 a ton), the highest price since Aug. 1, 2008. The most- active contract pared gains to trade at 325.20 yen at 2:44 p.m. in Tokyo. April-delivery futures on the National Commodity & Derivatives Exchange Ltd. in Mumbai gained 1 percent to 160.55 rupees a kilogram yesterday.

India’s rubber production last year dropped 3.8 percent to 831,400 tons, the rubber board said. Output last month rose 5 percent to 50,650 tons, it said.

Stockpiles rose 26 percent to 248,000 tons at the end of last month, compared with 196,230 tons a year earlier, the board said. Exports fell 49.4 percent to 23,764 tons, it said.