Rubber Jumps as China's Manufacturing Improves, Yen Weakens

Rubber rallied as data showed China’s manufacturing expanded, boosting prospects for demand from the world’s largest user, and a weaker Japanese currency raised the appeal of the yen-denominated futures.
Rubber for delivery in January on Tokyo Commodity Exchange gained as much as 2.8 percent to 267.8 yen a kilogram ($2,724 a metric ton) and traded at 266.2 yen at 11:18 a.m. The rally pared losses for futures this year to 12 percent.

A private gauge of Chinese factory output rose to 50.1 for August from an 11-month low, adding to signs the world’s second-biggest economy is stabilizing. The yen slid to 98.34 per dollar, the weakest since Aug. 15, after Federal Reserve minutes stoked speculation stimulus will be cut next month.

“The Chinese data eased concerns rubber demand may weaken,” said Kazuhiko Saito, analyst at broker Fujitomi Co. in Tokyo. “Futures also got a boost from the currency market.”

Fed officials were “comfortable” with Chairman Ben S. Bernanke’s plans to start reducing bond buying later this year should the economy improve, and a few said tapering may be needed soon, minutes of their July meeting showed.

The preliminary reading of 50.1 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July and the 48.2 median estimate in a Bloomberg News survey of 16 economists. A number above 50 indicates an expansion.

Rubber for delivery in January added 1.7 percent to 19,875 yuan ($3,245) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board dropped 0.4 percent to 80.95 baht ($2.52) a kilogram yesterday, according to the Rubber Research Institute of Thailand.