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Tuesday, May 24, 2022

Rubber Set for Weekly Gain as Oil Price Adds to Synthetic Costs

Rubber was poised for a weekly advance after oil jumped to a two-week high, raising speculation prices may increase for rival synthetic products used in tires.

Rubber for delivery in October advanced as much as 2.6 percent to 265.8 yen a kilogram ($2,679 a metric ton), the highest level for a most-active contract since April 15. Futures traded at 263 yen on the Tokyo Commodity Exchange at 10:54 a.m. and gained 3.9 percent this week, the first in two weeks.

West Texas Intermediate crude traded at $93.39 a barrel after surging 2.4 percent yesterday to the highest settlement since April 10. Speculation grew that the European Central Bank will cut its key interest rate to a record low, increasing investor appetite for riskier assets, said Kazuhiko Saito, analyst at broker Fujitomi Co. in Tokyo.

“Rubber chased a rally in oil and other industrial commodities amid speculation that monetary easing from Japan to Europe will support a global recovery,” he said today by phone.

Banks including Nomura International Plc, UBS AG and Royal Bank of Scotland Group Plc are forecasting that the ECB will drop its main refinancing rate to 0.5 percent at a meeting on May 2 after gauges of European manufacturing and services for April showed weakness. The Federal Reserve, the Bank of Japan and the Bank of England have also purchased bonds and cut rates to stimulate growth.

Rubber for September delivery on the Shanghai Futures Exchange added 2.3 percent to 19,565yuan ($3,171) a ton. Thai rubber free-on-board gained for a fourth day yesterday, rising 0.9 percent to 82.55 baht ($2.81) a kilogram, according to Rubber Research Institute of Thailand.

Source: Bloomberg

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