Rubber surges to record high

Rubber rose to a record as rain cut output, worsening a supply shortage, as demand for the commodity used in tyres expands, led by rising car sales in China and India. The cash price in Thailand also reached a record.

May-delivery rubber on the Tokyo Commodity Exchange climbed as much as 3.8 per cent to an all-time-high of ¥396.4 a kg (4,712 a tonne), exceeding the previous record of ¥388.9 reached on February 13, 1980, before settling at ¥395.5. The contract has gained 43 per cent this year.

Futures advanced after China’s central bank refrained from increasing interest rates and government reports showed China’s economy is gaining momentum, boosting speculation that demand from the largest user will keep expanding. China’s industrial-output growth accelerated to 13.3 per cent last month from a year earlier, surpassing economists’ median estimate of 13 per cent.

“The figures from China showed economic growth accelerated, regardless of government measures to cool expansion,” said Takaki Shigemoto, an analyst at research company JSC Corp in Tokyo. “The data, together with a lack of a rate increase by China, created a bullish mood among investors, leading to a rally in equities and commodities markets.”

May-delivery rubber in Shanghai rose as much as 4.5 per cent to close at a daily limit of 35,320 yuan ($5,302) a tonne. The contract reached a record 38,920 yuan November 11.

Cash rubber in Thailand surged to a record 138.55 baht per kilogram, boosted by a supply shortage and the Tokyo rally, according to the Rubber Research Institute of Thailand.

The price will likely extend gains as latex output in the country starts a seasonal decline as early as next month, said Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

China, India
A natural-rubber shortage in India, the world’s biggest consumer after China, may deepen almost five times over the next decade as rising incomes boost demand for tyres. The deficit may widen to 840,000 tonnes in 2020 from 175,000 tonnes next year, according to Vinod Simon, president of the All India Rubber Industries Association. In 2015, the shortfall might be 687,000 tons, Simon said.

China’s sales of passenger cars including multipurpose and sport-utility vehicles increased 29.3 per cent to 1.34 million last month, higher than the previous record of 1.32 million in January, according to the China Association of Automobile Manufacturers. The pace of growth was the fastest since April.