Rubber advanced to a record amid speculation that China, the largest consumer, may step up buying to rebuild stockpiles before the low-production period begins in major growing areas in Thailand. The Thai cash price also climbed to an all-time high.
The July-delivery contract climbed as high as 522.50 yen a kilogram ($6,267 a metric ton) in an after-hours trading on the Tokyo Commodity Exchange. Trades in this session will be settled tomorrow. The most-active contract has rallied 25 percent this year, extending last year’s 50 percent advance, as rising car sales led by China and India boosted demand for tires.
Natural-rubber inventories monitored by the Shanghai Futures Exchange declined 615 tons to 58,058 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the bourse said Feb. 11. The volume was 62 percent below last year’s peak of 151,832 tons.
“China may have to increase rubber purchases to replenish stockpiles while supply is available,” said Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo. “Shipments from Thailand will dwindle in coming months as the low-production period begins.”
Farmers reduce tapping during the so-called wintering period from February to May, when trees shed leaves and latex production drops. Thai output declines as much as 60 percent compared with peak levels, according to the Association of Natural Rubber Producing Countries. Indonesia and Malaysia will enter the low-production period at about the same time.
Persistent Rain
The seasonal drop in production is set to occur after La Nina brought higher-than-average rain to parts of Southeast Asia, curbing output in Thailand, Indonesia and Malaysia. The three countries account for about 70 percent of global supply.
“The price is on an upward trend as persistent rains in Thailand’s southern provinces are likely to continue disrupting latex tapping,” Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd., said by telephone from Bangkok.
The physical price of rubber in Thailand, the world’s top exporter, extended gains to an all-time high of 194.30 baht ($6.32) per kilogram today, according to the Rubber Research Institute of Thailand.
Car-sales growth in China, the world’s biggest auto market, will be about 10 percent to 15 percent this year, according to the China Association of Automobile Manufacturers. Total auto sales, which include cars, trucks and buses, jumped 32 percent last year to 18.06 million, the group said.
China Consumption
Natural-rubber consumption in China may rise 9 percent to 3.6 million tons this year, while rubber use in India may gain 5.2 percent to 991,000 tons, according to the Association of Natural Rubber Producing Countries.
Sumitomo Rubber Industries Ltd., Japan’s second-largest tire maker, raised its earnings estimate last week, citing strong sales of snow tires in the domestic market and expanding demand overseas. Bridgestone Corp., the largest manufacturer, announced increases of 8 percent to 15 percent in product prices for the Japanese market from June 1.
In Shanghai, May-delivery rubber gained as much as 1.6 percent to 42,350 yuan ($6,572) a metric ton, nearing a record 43,500 yuan reached on Feb. 9, and closed at 42,860 yuan.
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.bloomberg.com
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