Rubber at 15-month high on crude oil rally

Rubber climbed to a 15-month high after crude oil price rose on optimism that the US economic recovery is gathering momentum, increasing its competitiveness against rival synthetic products that are made from petroleum.

Futures in Tokyo advanced as much as 1.5 per cent to the highest level since September 26, 2008. Oil rallied for a third day yesterday as initial US jobless claims fell more-than-estimated and orders for durable goods excluding transportation equipment topped economist forecasts.

“Rising crude oil prices and a weakening yen continue to drive rubber prices higher,” Rewat Yenchai, an analyst at AGROW Enterprise, said.

Natural rubber for June delivery climbed by as much as 4 yen to 278.9 yen per kg ($3,052 a tonne) on the Tokyo Commodity Exchange before settling at 276.3 yen. Prices gained 2.5 per cent this week, extending last week’s 9.2 per cent increase.

Crude oil for February delivery rose 1.8 per cent yesterday to $78.05 a barrel on the New York Mercantile Exchange, the highest settlement since December 1. Oil rose 75 per cent this year, set for the best performance in a decade.

The yen traded at 91.55 per dollar at 3.40 pm in Tokyo after nearing the eight-week low reached December 23.

Higher demand
Rubber has more than doubled this year, reversing last year’s 56 per cent slump, as government stimulus measures in China, the largest consumer of the commodity, led a global recovery in demand.

“Higher demand in Japan, which will be on top of strong demand from China, will have a long-term positive impact on the market,” said Rewat. “We could see TOCOM prices rising to 286 yen by the end of this year.”

Car sales in China climbed 98 per cent to 1.04 million units last month, the nation’s automobile manufacturers’ association said December 10. Japan’s vehicle sales may rise 4.1 per cent to 4.8 million vehicles next year as the government extends subsidies to boost car demand, an auto industry group said yesterday.

Rubber for March delivery on the Shanghai Futures Exchange added 0.5 per cent from the previous settlement to close at 23,450 yuan ($3,435).