Rubber Gains to Record as Rain Curbs Thai Supply, China Demand Increases

Rubber advanced to a record for a third day as rain curbed output in Thailand, heightening concern that a supply shortage may worsen as rising car sales boost demand from China, the world’s biggest consumer.

May-delivery rubber gained as much as 1.1 percent to 413.3 yen per kilogram ($4,933 a metric ton) on the Tokyo Commodity Exchange before trading at 412.9 yen at 9:31 a.m. The most- active contract has climbed 50 percent this year.

Auto sales in China may outstrip the U.S. for a third consecutive year in 2011 as the world’s largest carmakers Toyota Motor Corp., General Motors Co. and Volkswagen AG estimate sales will grow by as much as 15 percent.

GM, the biggest foreign automaker in China, expects sales to grow as much as 15 percent, China President Kevin Wale said yesterday. Volkswagen, Europe’s largest carmaker, projects China’s markets will rise 10 to 15 percent, according to Soh Weiming, the company’s local executive president.

Sales growth in China may grow even as the Asian nation’s government is set to end incentives this month that helped boost its auto sales by 34 percent to 16.4 million through November. Next year, auto sales in China may reach 20 million, according to Booz & Co. and Nomura Holdings Inc. analysts. Light-vehicle sales in the U.S. may be as much as 12.8 million units, saidAshvin Chotai, managing director of Intelligence Asia Automotive, a consultant.

Persistent rains across Thailand, Indonesia and Malaysia, the top three producers, have disrupted tapping and lowered output. The supply shortage may worsen as the low-production season starts in Thailand around February.

The cash rubber price in Thailand extended a rally to a record 144.05 baht ($4.77) per kilogram yesterday, gaining 1.8 percent from Dec. 17, the Rubber Research Institute of Thailand said on its website. Local and overseas buyers, in particular China, continue purchasing to build up inventories ahead of New Year holidays and the low-production season, it said.

(Source: http://www.bloomberg.com/news/2010-12-21/rubber-gains-to-record-as-rain-curbs-thai-supply-china-demand-increases.html)