Rubber Gains First in Four Days as Oil Boosts Rival's Cost

By Aya Takada

Sept. 12 (Bloomberg) -- Natural rubber futures gained for the first time in four days as oil rose on concern a hurricane may disrupt supply, boosting the cost of making rival synthetic products used in vehicle tires.

Futures in Tokyo climbed as much as 0.7 percent after reaching a three-week low yesterday. Crude oil in New York advanced from a five-month low as Hurricane Ike headed toward a near-direct hit on Houston, the busiest U.S. refining center.

``A rally in oil and other industrial commodities spurred investors to buy back rubber,'' Jun Nishimuta, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone.

Rubber for February delivery added 0.4 percent to 302.7 yen a kilogram ($2,824 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Futures reached a 28-year high at 356.9 yen on June 30, when record oil prices spurred investors to buy commodities as an inflation hedge. Prices lost 2 percent this year.

Gains were limited by concern slowing global economies may weaken demand for the raw material, Nishimuta said. Japan's economy contracted more than the government initially estimated last quarter after figures showed businesses cut spending.

Gross domestic product shrank an annualized 3 percent in the three months ended June 30, Japan's Cabinet Office said today. It was more than the 2.4 percent drop reported last month.

China's passenger-car sales fell in August for the first time in more than three years as the Beijing Olympics and a slumping stock market delayed purchases, the China Association of Automobile Manufacturers said on Sept. 9. China is the world's biggest rubber user.

November-delivery rubber on the Shanghai Futures Exchange, the most-active contract, rose 0.6 percent to 22,225 yuan ($3,246) a ton at 10:15 a.m. local time.

To contact the reporters on this story: Aya Takada in Tokyo atakada2@bloomberg.net