Rubber futures in China, the world’s biggest user of the material used to make tires, may rally as much as 7 percent in the next week, Wanda Futures Co. said, citing a technical study of moving averages.
The moving average convergence-divergence indicator is showing signs of strengthening, said analyst Yang Zhiyong by phone from Urumqi in western China. The most-active contract, which closed 18,665 yuan ($3,039) a ton yesterday, may test 20,000 yuan, he said. Futures have broken the five-day, 10-day and 20-day averages in the rebound through July.
Futures have surged 11 percent since touching 16,835 yuan on June 25, the lowest level since September 2009. Some investors believe the market has bottomed out and physical inventory in China is declining, Yang said.
Inventories in Qingdao, China’s trading hub for the commodity, fell 3.4 percent to 330,300 tons on July 15 from 341,900 tons on June 28, according to the Qingdao International Rubber Exchange. Inventory was at record 371,100 tons on April 26, the bourse said.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
Source: Bloomberg
