Rubber surged to a seven-month high on expectations for further stimulus after Japan’s Liberal Democratic Party reclaimed power and on optimism China will increase imports after cutting duties.
The contract for delivery in May advanced 2.8 percent to end at 284.2 yen a kilogram ($3,384 a metric ton), the highest closing level since May 10, on the Tokyo Commodity Exchange. Futures climbed 7.9 percent this year, rebounding from a 36 percent drop in 2011.
China, the world’s biggest user of rubber, will reduce import duties next year, potentially boosting purchases and curbing domestic prices. The Japanese yen fell to its weakest level since April 2011 versus the dollar after Shinzo Abe’s Liberal Democratic Party swept to power in Japanese elections yesterday, giving him a mandate to act on pledges of expanded fiscal and monetary stimulus.
“Weakening yen supported the gain today,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore. China’s import tax reduction also gave a boost to rubber prices, he added.
Taxes will be either 20 percent or 1,200 yuan ($193) a ton, whichever is lower, for imports beginning Jan. 1, the Finance Ministry said on its website today. The tariffs are the lower of either 20 percent or 2,000 yuan a ton for natural rubber and either 20 percent or 1,600 yuan a ton for ribbed smoked sheets, said a previous statement from the ministry.
“This is going to weigh down local prices as they are currently higher than international markets and may help boost imports,” said Chen Ruibi, an analyst at Shanghai CIFCO Futures Co. Rubber for delivery in May rose 1 percent to close at 25,345 yuan ($4,065) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board gained 1.6 percent to 95.60 baht ($3.12) a kilogram today, according to the Rubber Research Institute of Thailand.