By Aya Takada and Supunnabul Suwannakij
Jan. 14 (Bloomberg) -- Rubber climbed to an all-time high for a third day as lower prices lured buyers amid concern that a seasonal drop in shipments from top exporter Thailand is set to worsen a supply shortage.
The June-delivery contract gained as high as 457.8 yen per kilogram ($5,549 a metric ton) on the Tokyo Commodity Exchange in after-hours trading. Transactions in this session would be settled on Monday.
Rubber, which has beaten other commodities this year, may extend its rally as rains cut supply, compounding the seasonal output drop, while car sales boost demand. The price may gain to 500 yen in the first half, according to the median forecast of the four analysts and fund managers surveyed by Bloomberg.
“Buyers stepped in to accumulate after a brief correction this morning,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said from Bangkok. “Fundamentals remain supportive as supplies are inadequate to meet demand and car production in China and Thailand is expected to rise.”
Rubber has advanced 10 percent this month, extending last year’s 50 percent rally. Demand for the commodity used in tires has grown on rising car sales led by China and India. Supply may lag demand as Thai output, hurt by heavy rain last year, may drop further as the low-output period starts from next month.
“Buyers from China, Japan and the U.S. are in the market everyday although price keeps going up,” said Roka Komiya, who trades the commodity at Marubeni Corp. in Singapore. This could push up prices further, he added.
The Thai cash price extended a rally to 166.3 baht ($5.46) per kilogram today because supplies remain tight amid strong demand, according to the Rubber Research Institute of Thailand.
New Year Break
Buyers in China, the largest user, may step up purchases to replenish stockpiles before the nation marks the Lunar New Year break next month, according to Kazunori Kokubo, general manager at Tokyo-based broker Yutaka Shoji Co. The week-long holiday starts Feb. 2.
China’s passenger-vehicle sales surged 33 percent in 2010, as government stimulus measures and economic growth helped the country remain the world’s largest auto market for a second year. Annual vehicle sales surged about 10-fold in the past decade on rising affluence and government stimulus programs.
Passenger-car sales in India may increase 18 percent this year, according to Pawan Goenka, head of the Society of Indian Automobile Manufacturers. Shipments jumped 31 percent to 1.87 million last year, according to the group, which represents all automakers in the country.
Rubber production in Thailand during leaf-shedding season, which runs from the end of February until May, shrinks 45 to 60 percent from peak production, the Association of Natural Rubber Producing Countries said in December. The low-production period also occurs at the same time in northern Indonesia and Malaysia, lowering output, the group said.
May-delivery rubber in Shanghai gained 1.3 percent to close at 38,570 yuan ($5,854) a ton. The price reached a record 38,920 yuan on Nov. 11.
--Editors: Ravil Shirodkar, Richard Dobson
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net; Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
source - www.businessweek.com
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