Rubber Rises to 18-Month High as Thai Supply Drops, Oil Climbs

By Aya Takada

March 29 (Bloomberg) -- Rubber advanced to the highest level since September 2008 as supply in Thailand, the world’s largest exporter, declined and an increase in oil prices boosted the cost of making rival synthetic products used in tires.

Futures in Tokyo rose as high as 312.3 yen per kilogram ($3,373 a metric ton) after last week rallying 5.9 percent. The price has advanced 13 percent this year.

Shippers in Thailand raised the price of natural rubber for overseas buyers by 3 percent to reflect declining supply, said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. Thailand is in the annual low-output season, known as wintering, which runs from February to April.

“Investors bought rubber futures as they were undervalued when compared with physical prices,” Shigemoto said by phone today.

Rubber for September delivery, the most-active contract, gained 1.9 percent to settle at 312 yen on the Tokyo Commodity Exchange.

Thai shippers raised offers for so-called RSS-3 grade rubber for May shipment to $3.40 a kilogram from $3.30 on March 25, Shigemoto said. During wintering rubber trees shed their leaves and latex production slows.

Futures also increased as higher oil prices raised the appeal of natural rubber as an alternative to synthetic products made from petroleum, he said.

Oil Climbs

Crude oil climbed from a two-week low on speculation that the economic recovery will boost fuel demand, and as receding concerns over Greece’s debt crisis bolstered the euro against the dollar.

The May-delivery contract rose 0.8 percent to $80.61 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:39 p.m. Tokyo time.

Rubber for September delivery rose as much as 1.6 percent to 25,185 yuan ($3,689) a ton on the Shanghai Futures Exchange, the highest level since March 1. It traded at 25,050 yuan at 2:45 p.m. local time.

Natural rubber inventories monitored by the Shanghai bourse plunged 24,663 tons to 74,220 tons, based on a survey of 10 warehouses, the exchange said March 26. That was the lowest level since August 2009.

(businessweek.com)