Rubber Jumps to 9-Month High as Oil Gain Boosts Demand Outlook

By Jae Hur

Aug. 11 (Bloomberg) -- Rubber soared to a nine-month high, advancing for a second day, on speculation a rally in crude oil may increase demand for the commodity used in tires amid growing optimism for a global economic recovery.

Futures in Tokyo rose as much as 4.6 percent as crude oil advanced for the first time in four days, boosting the appeal of natural rubber versus synthetic product. China’s industrial production gained 10.8 percent in July, compared with a 10.7 percent advance in June, the statistics bureau reported today.

“Crude oil prices holding above $70 a barrel have given support to rubber,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today. Increasing car sales in China and declining rubber stockpiles in Japan have made investors reluctant to sell, he said.

January-delivery rubber rose as much as 9 yen to 205.4 yen a kilogram ($2,122 metric ton), the highest since Nov. 5, on the Tokyo Commodity Exchange and closed at 204.4 yen. The price gained 2.3 percent yesterday.

Rubber has risen 34 percent since July 13 and crude oil has gained 19 percent. Crude oil for September delivery rose 0.7 percent to $71.08 a barrel on the New York Mercantile Exchange at 3:38 p.m. Tokyo time.

China’s passenger-vehicles sales rose 70.5 percent in July to 832,596, the China Association of Automobile Manufacturers said Aug. 7. The gain was the biggest since January 2006 as tax cuts and government subsidies spurred demand. General Motors Co., the largest overseas automaker in China, and Nissan Motor Co. both intend to add capacity in the country, which is set to surpass the U.S. as the world’s largest auto market this year.

Car Industry

“With a jump in China’s car sales, and GM’s plan to use the internet to bolster car sales, the outlook for the global car industry is relatively bright,” said Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co.

General Motors will let customers buy cars and trucks online from some California dealers through EBay Inc., the operator of the most-visited U.S. e-commerce Web site. Chevrolet, Buick, GMC and Pontiac brands will be available at gm.ebay.com starting today through Sept. 8, GM and San Jose, California- based EBay said yesterday in a statement. More than 225 dealers will participate, the companies said.

A Labor Department report last week showed the U.S. jobless rate fell to 9.4 percent in July from June, the first drop since April 2008. Economists had estimated the rate would rise to 9.6 percent.

Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, added 3.1 percent to 19,405 yuan ($2,839) a ton at 2:42 p.m. local time.

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