Rubber Advances as Demand May Increase Amid Recovery Optimism

By Jae Hur

Aug. 6 (Bloomberg) -- Rubber climbed, reversing earlier losses, on speculation that demand for the commodity used to make tires may increase from auto makers amid renewed optimism of a global economic recovery.

Futures in Tokyo rebounded as a rally in Asian stocks boosted confidence that the worst of the global recession has passed and demand for commodities will rebound. They earlier lost as much as 5.6 percent from a nine-month high set on Aug. 4 on investor speculation that the price rally was excessive.

“Rubber got a boost from gains in stocks and higher prices of platinum” which is used to make auto emissions-control parts, Takaki Shigemoto, an analyst at Okachi & Co., said by telephone today from Tokyo.

January-delivery rubber closed up 0.7 percent at 195.8 yen a kilogram ($2,058 a ton) on the Tokyo Commodity Exchange after trading as low as 191.6 yen. On Aug. 4, the contract touched 202.9 yen, the highest since Nov. 5.

The decline of more than 10 yen from this week’s high “was too fast and too much,” while some investors were still reluctant to buy above 200.0 yen, Shigemoto said.

The 14-day relative strength index for rubber futures, a gauge of momentum, has climbed above 70 since July 31, a level some investors use as an indicator that prices may decline.

Rubber gained 21 percent in July, the most since December 2006, and have jumped 44 percent this year as global equities rallied and exporters, including Thailand, curbed shipments.

The MSCI Asia Pacific Index gained 0.8 percent to 112.79 as of 3:50 p.m. in Tokyo. It has climbed 61 percent from a five- year low on March 9. Platinum was little changed at $1,286 an ounce after gaining 9.5 percent in the previous five days.

U.S. Car Sales

U.S. sales for Toyota Motor Corp., the world’s largest automaker, fell 34 percent January through July after a 15 percent drop last year as the industry struggled with its worst drop in three decades. Last month, aided by a government incentive program, Toyota sales fell 11 percent, its smallest slide in 2009.

Honda Motor Co., Japan’s second-biggest carmaker, will raise global output as emerging markets lead a recovery in auto demand. The company will build about 90,000 vehicles more than initially planned this year in response to higher-than-forecast sales in China, Thailand, India, Indonesia and Brazil, Chief Financial Officer Yoichi Hojo said yesterday.

Sales in China are increasing on government stimulus spending and a recovery in the economy, Hojo said. In the first six months of the year, the company’s sales in the country rose 12 percent, capped by a 54 percent jump in June.

Rubber shippers in Thailand, the world’s top exporter, cut offers for the RSS-3 grade for September shipment to $1.96 a kilogram today from $1.98 yesterday and $2.02 on Aug. 4, said Okachi’s Shigemoto.

January-delivery rubber on the Shanghai Futures Exchange, the most-active contract, lost 0.3 percent to close at 18,765 yuan ($2,747) a ton.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net