Rubber Advances From Five-Year Low as Oil Rebounds, Yen Drops

By Aya Takada

Dec. 3 (Bloomberg) -- Natural rubber futures climbed from a five-year low, as rising oil prices increased the cost of making rival synthetic products and the yen’s drop against the dollar raised the appeal of the contracts.

Prices in Tokyo gained as much as 2.1 percent after earlier falling to the lowest since July 2003 on data showing the worst U.S. auto sales in 26 years. Crude oil in New York rebounded from a three-year low and the yen retreated from a five-week high against the dollar.

“Investors bought back futures, taking a cue from the energy and currency markets,” Jun Nishimuta, analyst at Kanetsu Asset Management Co. in Tokyo, said by phone today. “There were no active buyers in the market as weakening demand is a major drag on rubber prices.”

Rubber for May delivery added 0.9 percent to settle at 117.6 yen a kilogram ($1,265 a metric ton) on the Tokyo Commodity Exchange. The contract earlier fell as much as 2.8 percent to 113.3 yen.

Rubber prices have plunged 67 percent from the 28-year high of 356.9 yen reached on June 30 as falling car sales spurred manufacturers to cut output, leading to a drop in demand for the commodity used to make tires.

U.S. auto sales slumped 37 percent in November to the lowest annual rate in 26 years as the recession and Detroit automakers’ aid pleas kept buyers out of showrooms.

Auto Sales

Sales by General Motors Corp. tumbled 41 percent, the second drop of that size in as many months. Toyota Motor Corp.’s sales fell 34 percent, the most since at least 1980, while Chrysler LLC’s 47 percent slide was the worst since at least 1981, according to research firm Autodata Corp. Deliveries fell for all major automakers.

Futures were also supported by speculation that the government of Thailand, the world’s largest producer and exporter, may start buying natural rubber to support prices, Nishimuta said.

“If prices fall below $1 a kilogram, the Thai government may intervene,” he said.

March-delivery rubber on the Shanghai Futures Exchange, the most-active contract, fell 3.3 percent to 9,920 yuan ($1,441) a ton.

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