Rubber advances to 3-week high

Rubber climbed to the highest level in almost three weeks, as oil’s rally boosted the appeal of the commodity as an alternative to synthetic products and concern about a slowdown in the US and Chinese economies eased.

The December-delivery contract advanced as much as 2.5 per cent to 385.7 yen a kilogram ($4,766 a tonne), the highest level since June 16, before trading at 385 yen on the Tokyo Commodity Exchange at 10:25 am.

Oil traded near a three-week high in New York as signs of economic growth in the US and China stoked speculation that fuel demand may increase in the world’s biggest crude-consuming countries. Orders placed with US factories increased in May, while China’s services industries expanded at the second-fastest pace this year as new orders and employment climbed.

 

“Higher oil strengthened speculation that synthetic rubber prices may increase, supporting futures in Tokyo,” Hisaaki Tasaka, an analyst at broker ACE Koeki Co, said on Wednesday by phone.

Bookings for manufacturers’ goods in the US rose 0.8 per cent after a revised 0.9 per cent decline in April that was smaller than previously estimated, figures from the Commerce Department showed yesterday in Washington.

Rubber futures also gained as stronger cash prices raised speculation that supply from Thailand, the world’s largest producer and exporter, may be limited, Tasaka said. The physical price of Thai rubber gained to 144.65 baht ($4.74) a kg yesterday from 143.15 baht on July 4, the Rubber Research Institute of Thailand said on its website.