Rubber Rises to One-Year High as Stock Rally, Oil Boosts Demand

By Aya Takada

Oct. 20 (Bloomberg) -- Rubber rose to the highest level in a year as a rally in equities boosted investor confidence that the global economic recovery will raise demand for raw materials.

Prices in Tokyo climbed as much as 3.5 percent to 226.5 yen a kilogram ($2,512 a metric ton), the highest level since Oct. 7, 2008. Futures also gained as oil’s advance to a one-year high boosted the appeal of natural rubber as an alternative to synthetic products made from petroleum.

“The bull run in global stocks increased investor appetite for risk assets, leading to their purchases of commodities,” Hisaaki Tasaka, analyst at broker ACE Koeki Co., said by phone. “Stronger oil is also positive for the price of rubber.”

March-delivery rubber rose 3.4 percent to settle at 226.2 yen on the Tokyo Commodity Exchange. It was the biggest daily increase since Oct. 7.

Prices gained 66 percent this year amid speculation that economic recovery will help boost car sales, leading to an increase in demand for the commodity used in tires.

Asian stocks rose, driving the MSCI Asia Pacific Index to the highest level in more than a year, as earnings reports boosted confidence in the global recovery.

The index added 1.1 percent to 121.73 and is set for the highest close since Sept. 8, 2008. It has surged 72 percent from a five-year low on March 9 on signs the global economy is rebounding from the worst slowdown since World War II.

Crude Oil

Crude oil traded near a one-year high in New York after rising the past eight days on optimism that demand will increase. Rubber futures often move in the same direction as oil as competing synthetic products are made from naphtha, distilled from petroleum.

Crude oil for November delivery gained 0.3 percent to $79.85 a barrel as of 3:45 p.m. Tokyo time in electronic trading on the New York Mercantile Exchange.

January-delivery rubber on the Shanghai Futures Exchange gained 1 percent to 19,210 yuan ($2,814) a ton at 2:46 p.m. local time.

Still, gains in the futures were curbed by concern that an increase in stockpiles in China to a five-year high may reflect slowing demand in the world’s largest consumer, Tasaka said.

Rubber inventories increased 4,404 tons in the week ended Oct. 15 to 105,157 tons, the most since November, 2004, the Shanghai exchange said last week.

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