Rubber Futures Advance as Growth in China's Output Boosts Demand Outlook
Rubber climbed for a third day after data showed faster-than-estimated manufacturing growth in China in November, improving optimism that demand from the world’s largest user will increase.
May-delivery rubber on the Tokyo Commodity Exchange gained as much as 1 percent to 363.8 yen per kilogram ($4,351 a metric ton) before settling at 363.5 yen. The most-active contract, which reached a 30-year high of 383 yen on Nov. 11, rose 10 percent in November, the fifth monthly advance.
The Purchasing Managers’ Index rose to 55.2 from 54.7 in October, China’s logistics federation said on its website today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.
“The PMI data shows that China economy is still growing,” Ker Chung Yang, an investment analyst at Phillip Futures Pte., said by phone from Singapore. “It’s a bullish sign for rubber as China is the largest car producer and rubber demand will remain strong and supported.”
Futures in Shanghai advanced as much as 2.2 percent to 31,550 yuan ($4,699) a ton before closing at 31,160 yuan. The price reached a record high of 38,920 yuan on Nov. 11.
Chinese policy makers are seeking to sustain the nation’s expansion while taming the fastest inflation in 25 months. Shanghai’s benchmark stock index yesterday completed its first monthly loss since June on concern growth may falter because of Premier Wen Jiabao’s campaign against rising prices.
India, the fourth-biggest producer of natural rubber, may allow imports of as much as 100,000 tons at a lower duty to meet surging demand for tires as rising incomes boost car sales, Trade Secretary Rahul Khullar said.
The finance ministry may make a decision after the end of the current session of parliament which runs to Dec. 13, Khullar said in an interview in New Delhi yesterday. The trade ministry has recommended imports at a concessional rate for a maximum of 100,000 tons and tax changes on tire imports, he said. Rubber imports are taxed at 20 percent.
Natural rubber prices in India reached a record last month on concern that the low-output season in Southeast Asia will worsen a deficit.
Consumption of natural rubber in India is expected to increase 5 percent next year to 1 million tons, from an estimated 5.2 percent growth this year at 952,000 tons, according to Association of Natural Rubber Producing Countries.
The cash price of natural rubber in Thailand was unchanged at 131.55 baht ($4.37) per kilogram today. Auctioned prices of ribbed smoked sheets gained 0.5 percent today to 124.09 baht, boosted by persistent demand from both local and overseas buyers amid a supply shortage, according to the Rubber Research Institute of Thailand.
Wet weather in southern Thailand continues to cut supply, boosting prices, the institute said. The south accounts for about 80 percent of production.
Supply from the Association of Natural Rubber Producing Countries, which accounts for about 92 percent of global output, may drop 3.8 percent in the three months to Dec. 31 as rains have disrupted tapping in Thailand, the group said on Nov. 25.
Output from Thailand is estimated to tumble by 28 percent during October-to-December period, which will lower production this year by 1.4 percent to 3.12 million tons, the group said.
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