Rubber Heads for Biggest Weekly Advance in Seven Months on Oil

By Jae Hur

Aug. 14 (Bloomberg) -- Rubber advanced to a 10-month high and is poised for the biggest weekly gain in seven months, as crude oil extended gains, increasing demand for the commodity used to make tires.

Futures in Tokyo advanced as much as 2.4 percent to the highest since Oct. 8 as oil rose for a third day after U.S. stocks rallied and the German and French economies unexpectedly grew, sparking hopes for an economic recovery. A rise in crude prices boosts the appeal of rubber against synthetic product.

“Higher oil prices and rising stock markets have fueled optimism that the global economy may rebound and demand for rubber and other commodities will increase,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today.

January-delivery rubber climbed as much as 5.0 yen to 214.0 yen a kilogram ($2,246 a metric ton) on the Tokyo Commodity Exchange. The price was up 0.5 percent at 210.1 yen at 11:15 a.m. in Tokyo. The most-active contract has gained 9.5 percent this week, the most since Jan. 9.

Rubber in Tokyo has risen 54 percent this year as crude oil has gained 60 percent and car sales in China have jumped. Crude oil for September delivery added 1.2 percent to $71.36 a barrel on the New York Mercantile Exchange.

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

The MSCI Asia Pacific Index gained 1 percent to 114.50 as of 11:18 a.m. in Tokyo, on course for its highest close since Sept. 25, after the Standard & Poor’s 500 Index added 0.7 percent yesterday.

Shippers in Thailand raised offers for RSS-3 grade rubber for September shipment to $2.05 a kilogram yesterday from $1.98 on Aug. 12, according to Takaki Shigemoto, an analyst at Tokyo- based commodity broker Okachi & Co.

Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, fell for the first time in five days, losing 0.9 percent to 19,480 yuan ($2,851) a ton by 10:14 a.m. local time. The most-active contract has jumped 80 percent this year.

Rubber inventories grew 6,644 tons to 62,778 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said Aug. 7. That was the sixth weekly increase and up 52 percent from 41,393 tons on June 25.

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