Rubber futures in Tokyo climbed by the most in seven months after Thailand, the biggest shipper, is set to start buying the commodity to build up stockpiles in a bid to bolster prices.
The contract for delivery in March on the Tokyo Commodity Exchange advanced as much as 4.7 percent, the biggest increase for a most-active contract since March 11, to 191 yen a kilogram ($1,796 a metric ton) and traded at 188.9 yen by 11:03 a.m. local time. The price is up 5.7 percent this week, set for a second weekly advance.
The National Rubber Policy Committee approved a plan to spend 30 billion baht ($925 million) to build stockpiles from Oct. 22, Deputy Prime Minister Pridiyathorn Devakula said yesterday. The government aims to raise prices to at least 60 baht a kilogram in the next month or two, he said. The commodity, used to make tires, entered a bear market in January and this month touched a five-year low on bets demand from China will weaken, prompting producers to take action to boost prices.
“As Thailand took additional steps to bolster prices, investors rushed to buy back the futures,” said Gu Jiong, analyst at Yutaka Shoji Co., a broker in Tokyo.
This month, industry officials from Thailand, Indonesia, Vietnam, Malaysia and Cambodia and the International Rubber Consortium agreed to refrain from selling below current prices.
Prospects for reduced shipments from the Asian countries, including the three largest producers of Thailand, Indonesia and Vietnam, spurred Chinese consumers to secure supply, leading to a draw-down in stockpiles, Gu said.
Inventories in Qingdao, China’s main rubber-trading hub, fell to 143,800 tons as of Oct. 14 from 154,100 tons on Sept. 26, according to Qingdao International Rubber Exchange Market. A global surplus will shrink to 43,000 tons in 2015 from 292,000 tons this year as farmers curb output in response to declining prices, according to The Rubber Economist, a London-based industry adviser.
Rubber for delivery in January on the Shanghai Futures Exchange rose 1.8 percent to 12,700 yuan($2,073 a ton). Last month, futures slumped to the lowest since 2009. Thai rubber free-on-board lost 0.3 percent to 51.30 baht a kilogram yesterday, down 38 percent this year.
– Bloomberg
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