Rubber Advances on Speculation That Recovery May Boost Demand

March 24, 2010, 12:10 AM EDT

By Jae Hur

March 24 (Bloomberg) -- Natural rubber advanced on speculation that a firmer economic recovery will increase demand for the commodity used in tires.

Futures on the Tokyo Commodity Exchange rallied as much as 0.7 percent as the MSCI Asia Pacific Index rose to a two-month high as signs of growing demand for commodities boosted confidence in the strength of the global economic recovery.

“Rubber got a boost from rising stock markets,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “This has encouraged investment sentiment in commodities, including rubber.”

Rubber for August delivery gained as much as 2.1 yen to 289.9 yen per kilogram ($3,202 a metric ton) on the Tokyo Commodity Exchange and was at 289 yen at 12:30 p.m. local time. The most-active contract touched 290.3 yen yesterday, the highest price since March 15.

The MSCI Asia Pacific Index rose 0.5 percent to 125.12, set for the highest close since Jan. 19. The gauge has climbed 9.6 percent from a more-than-two-month low on Feb. 8 as improving U.S. jobs data, a Federal Reserve pledge to keep borrowing costs low and a Japanese bank-lending program eased concern that budget deficits in Europe may derail the recovery.

Rubber for September delivery rose as much as 0.5 percent to 23,935 yuan ($3,506) a ton on the Shanghai Futures Exchange, after dipping to 23,340 yuan. It last traded at 23,830 yuan.

Chinese imports of natural rubber surged 63 percent in the first two months of the year, the Association of Natural Rubber Producing Countries said on March 22. The natural rubber market has entered a “bullish phase” as buyers led by China boost imports, the association said in a newsletter.

In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered so-called RSS-3 grade rubber for May shipment at $3.30 per kilogram today, unchanged from yesterday, according to Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo.

(businessweek.com)