Rubber rose to a seven-week high after China’s Premier Li Keqiang said the nation’s economy will grow by at least 7 percent, boosting speculation that demand for the commodity used in tires will gain in the biggest consumer.
Rubber for delivery in December on the Tokyo Commodity Exchange settled at 256.3 yen a kilogram ($2,575 a metric ton), the highest for the most-active contract since June 5. Futures closed at 256.2 yesterday and have lost 15 percent this year.
Li said at a recent meeting with economists that 7 percent is the “bottom line” and the nation can’t allow growth below that, the Beijing News reported today. Speculation that growth would fall below the government’s annual target of 7.5 percent announced in March has intensified after Finance Minister Lou Jiwei said earlier this month that 6.5 percent expansion wouldn’t be a “big problem.”
“Li’s comment provided optimism that rubber demand in China will increase,” said Gu Jiong, an analyst at commodity broker Yutaka Shoji Co. Gains were limited as Japan’s currency strengthened against the U.S. dollar, he added.
The yen climbed as much as 0.5 percent to 99.15 per dollar, reducing the appeal of futures denominated in the Japanese currency, after a report showed yesterday that purchases of existing U.S. homes declined.
Rubber imports by China slumped 21 percent to 130,000 tons in June from a year earlier, data from the nation’s customs general administration showed yesterday. Inventories climbed 1,025 tons to 115,255 tons, the Shanghai Futures Exchange said on July 19, based on a survey of nine warehouses.
Rubber for January delivery on the SHFE lost 1.5 percent to 18,380 yuan ($2,995) a ton today.
Thai rubber free-on-board gained 0.6 percent to 79.35 baht ($2.56) a kilogram on July 19, according to Rubber Research Institute of Thailand. Thai markets were closed today and yesterday for a holiday.
Source: Bloomberg
