Rubber Jumps in Tokyo as Thailand Set to Buy for Reserve

Rubber futures in Tokyo climbed by the most in seven months as Thailand, the biggest shipper, is set to start buying the commodity to build up stockpiles in a bid to bolster prices.

The contract for March delivery on the Tokyo Commodity Exchange advanced 3.6 percent, the biggest gain for a most-active contract since March 11, to settle at 189 yen a kilogram ($1,779 a metric ton). Futures climbed 5.8 percent this week, the most since the five days through June 20.

The National Rubber Policy Committee approved a plan to spend 30 billion baht ($925 million) to build stockpiles from Oct. 22, Deputy Prime Minister Pridiyathorn Devakula said yesterday. The commodity, used to make tires, entered a bear market in January and this month touched a five-year low on bets demand from China will weaken, prompting producers to take action to boost prices.

“As Thailand took additional steps to bolster prices, investors rushed to buy back the futures,” said Gu Jiong, analyst at Yutaka Shoji Co., a broker in Tokyo.

This month, industry officials from Thailand, Indonesia, Vietnam, Malaysia and Cambodia and the International Rubber Consortium agreed to refrain from selling below current prices.

Prospects for reduced shipments from the Asian countries, including the three largest producers of Thailand, Indonesia and Vietnam, spurred Chinese consumers to secure supply, leading to a draw-down in stockpiles, Gu said.Shrinking SurplusA global surplus will shrink to 43,000 tons in 2015 from 292,000 tons this year as farmers curb output in response to declining prices, according to The Rubber Economist, a London-based industry adviser.

Inventories in Qingdao, China’s main rubber-trading hub, fell to 143,800 tons as of Oct. 14 from 154,100 tons on Sept. 26, according to Qingdao International Rubber Exchange Market.

Rubber for delivery in January on the Shanghai Futures Exchange rose 1.8 percent to close at 12,705 yuan ($2,073) a ton. Futures slumped to the lowest since 2009 last month and climbed 3.3 percent this week, the most since July.

Thai rubber free-on-board added 2 percent to 52.30 baht a kilogram, paring losses this year to 37 percent. The Thai government aims to raise prices to at least 60 baht a kilogram in the next month or two, according to the deputy prime minister.