Rubber Advances for Second Day as China May Buy for Reserves

Rubber climbed for a second day amid speculation that China, the world’s largest consumer, may make purchases from local suppliers for government stockpiles.

The contract for February delivery on the Tokyo Commodity Exchange gained as much as 1.5 percent to 277.6 yen a kilogram ($2,796 a metric ton) and traded at 274 yen at 10:52 a.m.

China held discussions with suppliers about buying 200,000 tons of rubber for state stockpiles, two industry executives with direct knowledge of the matter said yesterday. China will pay a premium of 300 yuan ($49) per ton over the prevailing rubber futures prices in the month of delivery, they said.

“The expectation for Chinese purchases provides support to rubber futures,” said Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo.

The State Reserve Bureau met Sinochem International Corp. (600500), China Hainan Rubber Industry Group Co. (601118) and Yunnan State Farms Group Co., the nation’s biggest domestic suppliers, about buying 150,000 tons of rubber, said the executives. The bureau is also in discussions to buy 50,000 tons of smoked rubber sheet imports, they said.

The contract for January delivery on the Shanghai Futures Exchange lost 0.8 percent to 20,225 yuan a ton. Thai rubber free-on-board was unchanged at 82.70 baht ($2.60) a kilogram yesterday, according to the Rubber Research Institute of Thailand.

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