Rubber advanced for a third day as the Japanese currency declined to a three-month low against the dollar, raising the appeal of yen-denominated contracts, and on speculation that demand from tiremakers may increase.
The July-delivery contract gained as much as 2.5 percent to 325 yen a kilogram ($4,142 a metric ton) on the Tokyo Commodity Exchange, before settling at 323.5 yen.
The yen dropped to 78.66 per dollar, the lowest level since Nov. 1, extending losses after Japan’s central bank unexpectedly added 10 trillion yen to an asset-purchase program and set an inflation goal of 1 percent. Japanese stocks rallied, sending the Nikkei 225 Stock Average toward a six-month high, as a falling yen boosted the earnings outlook for exporters including carmakers and tire producers.
“The yen’s drop gave the biggest boost to futures,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.
Rubber was supported by a seasonal decrease in supply as Thailand, the world’s largest producer and exporter, entered a low-production period this month, he said.
Supply in major producing countries is contained as trees are shedding leaves during the dry wintering season, while demand from the automotive industry is steady, according to the International Rubber Consortium Ltd.
Increasing imports from India, the second-largest user, is a sign that demand remains strong, said Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures Co.
Natural rubber imports tripled to 26,375 tons in January from a year earlier, the state-owned Rubber Board said on Feb. 13. Consumption rose 1.2 percent to 82,000 tons in January.
Gains were capped by concerns about the debt crisis as European finance ministers canceled a Brussels meeting slated for today. They will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($170 billion) along with about 100 billion euros of debt relief from private bondholders. Greece needs the aid to make a 14.5 billion-euro bond payment on March 20.
May-delivery rubber in Shanghai rose 1.5 percent to close at 28,665 yuan ($4,550) a ton. The Thai cash price gained 0.2 percent to 124.85 baht ($4.03) a kilogram today, according to the Rubber Research Institute of Thailand.