Rubber Price Rallies to Record High On Tire Demand, Supply Disruptions
Aya Takada & Supunnabul Suwannakij | December 21, 2010
Rubber futures climbed to a record, taking gains this year to 50 percent, on speculation that rising tire demand and supply disruptions may worsen a shortage.
May-delivery rubber advanced as much as 1.2 percent to 413.8 yen per kilogram ($4,944 per metric ton) on the Tokyo Commodity Exchange before settling at 413.1 yen. This year’s jump extends 2009’s rally, when prices more than doubled.
Auto sales in China may surpass the US for a third straight year in 2011 as the world’s largest carmakers — Toyota Motor Corp., General Motors Co. and Volkswagen AG — estimate sales will grow by as much as 15 percent.
In Thailand, the northeast monsoon will likely bring rains to southern provinces in late December, while heavy rains are expected across Indonesia, according to local meteorological offices. “
Fundamentally, rubber will likely extend rallies,” said Varut Rungkhum, an analyst at commodity broker Agro Wealth Ltd. in Bangkok. There are “worries over a supply shortage as rains may continue until early next year when the low-production period kicks in,” Varut said.
The Thai cash price rose 1.7 percent to 146.55 baht ($4.86) per kilo today, according to the Rubber Research Institute of Thailand. The gain was fueled by demand ahead of the holidays, while supplies from Thailand, Indonesia and Malaysia are inadequate, the institute said on its Web site.
Production in Thailand, the world’s biggest grower, may plunge 28 percent in the three months to Dec. 31 from a year ago as a La Nina weather pattern causes unusually heavy rain in the south, the Association of Natural Rubber Producing Countries said. Southern provinces account for 80 percent of Thai output.
Auto sales in China may reach 20 million units next year, according to Booz & Co. and Nomura Holdings Inc. analysts. GM, the biggest foreign automaker in China, expects sales to grow as much as 15 percent, China President Kevin Wale said on Monday. Volkswagen, Europe’s largest carmaker, projects China’s markets will rise 10 to 15 percent, according to Soh Weiming, the company’s local executive president.
Auto demand in China may grow even as it ends incentives this month that helped boost sales 34 percent to 16.4 million through November. US light vehicle sales may reach 12.8 million units, said Ashvin Chotai, managing director of consultants Intelligence Asia Automotive.
Rubber was “also supported by high crude oil prices,” said Ker Chung Yang, an analyst at Phillip Futures Pte. in Singapore. Costlier crude can boost natural rubber prices as the synthetic product is made from naphtha.
Crude oil traded near the highest level in two weeks on speculation that US economic growth will accelerate next year. Crude for February delivery rose as high as $89.77 per barrel in New York from $88.81 on Monday.
May-delivery rubber in Shanghai gained as much as 1.2 percent to 37,760 yuan ($5,669) per ton before closing at 37,685 yuan. The contract climbed to a record 38,920 yuan on Nov. 11.
Bloomberg
www.thejakartaglobe.com/business/rubber-...y-disruptions/413000