Rubber Futures Gain Most in Six Weeks as Decline Lures Buyers

By Rattaphol Onsanit

Aug. 22 (Bloomberg) -- Natural rubber futures gained the most in six weeks in Tokyo after the recent decline made it an attractive substitute to the rival synthetic product.

Rubber is headed for a first weekly advance in a month as a recovery in crude oil and a weakening dollar revived demand for commodities as alternative assets. Rubber has risen 2.6 percent this week, having slid 10 percent in the previous three.

Oil surged 4.9 percent yesterday to $121.18 a barrel, the most since June 6. Synthetic rubber is produced from naphtha, distilled from petroleum.

``People believe the Tokyo prices can't fall much further,'' said Rewat Yenchai, an analyst at a Bangkok-based brokerage AGROW Enterprise Ltd.

Rubber for January delivery climbed as much as 3.1 percent, the most since July 11, to 310.6 yen a kilogram ($2,856 a metric ton) on the Tokyo Commodity Exchange. It traded at 308.4 at the 11 a.m. local time break.

In Thailand, the world's biggest rubber exporter, tire maker Michilin & Cie bid for the RSS3 grade at $281 a kilogram on Aug. 18, the latest data on the Thai Rubber Association's Web site.

November-delivery rubber on the Shanghai Futures Exchange, the most-active contract, gained 2.3 percent to 23,045 yuan ($3,374.6) a ton at 10:50 a.m. local time.

To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net