Rubber Climbs as Weak Yen Boosts Appeal, China’s Output Gains

By Aya Takada

Dec. 11 (Bloomberg) -- Rubber climbed for the first time this week as a drop in Japan’s currency raised the appeal of yen-denominated contracts and growth in China’s industrial output boosted speculation raw material demand will increase.

Futures in Tokyo gained as much as 1.5 percent, reversing yesterday’s 3.6 percent slump. The yen fell as signs the global economy is improving spurred demand for higher-yielding assets. Asian stocks advanced after Chinese industrial production rose more than economists forecast and U.S. jobless claims fell to a one-year low.

“Rubber futures drew support from the currency market,” said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. “A recovery in equities markets also increased the risk appetite of investors, leading to purchases of commodities.”

Rubber for May delivery gained as much as 3.7 yen to 247.5 yen per kilogram ($2,783 a metric ton) before settling at 247.0 yen on the Tokyo Commodity Exchange.

The Japanese currency dropped against all of its 16 major counterparts before reports today forecast to show U.S. retail sales advanced for a second month and confidence among American consumers rebounded.

China’s factory output surged 19.2 percent last month from a year earlier, exceeding the 18.2 percent median estimate in a Bloomberg News survey of 25 economists. The data came a day after a Labor Department report showed the four-week average number of Americans filing for joblessness benefits declined to a one-year low, adding to optimism the first global recession since World War II is receding.

Thai Output

Rubber futures lost 5.9 percent this week, the worst performance since the week ended Aug. 21, as output increased in top producer Thailand after rain subsided.

“In producing areas in Thailand it did not rain this week as much as before,” Shigemoto said. “Production is picking up and supply will increase.”

Thai shippers offered so-called RSS-3 grade rubber for January shipment at $2.7 a kilogram today, down from $2.8 a week earlier, he added.

Rubber climbed to a 14-month high of 264.7 yen on Dec. 7 on speculation that heavy rain would slash Thai output, leading to a shortage in the global market as China, the largest consumer, leads a recovery in demand. Flooding hit four provinces in southern Thailand in late November. The situation is back to normal, according to the Royal Irrigation Department.

Rubber plantations in the four Thai provinces affected by flooding account for about 20 percent of the country’s total plantation area of about 2.7 million hectares (6.7 million acres), according to the Rubber Research Institute of Thailand.

Rubber for March delivery on the Shanghai Futures Exchange added 0.9 percent to 21,700 yuan ($3,178) a ton at 2:47 p.m. local time.

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