Market and product
Rubber climbs on Chinese demand cues
The speculators bought the commodity in abundance on belief that China would increase purchases after the Lunar Holiday ends on Wednesday.
The July contract rubber climbed 2.1% to $6,090 a metric ton (501.3 yen a kilogram) on the Tokyo Commodity Exchange and was seen trading at 499.3 yen as of 11:57 a.m.
The consumption of natural rubber in China is expected to rise to 3.6 million tons this year, a surge of 9%, reported Businessweek. China will kick start trade on Wednesday after a week of holiday.
Meanwhile, India consumption of rubber will gain 5.2 % to 991,000 tons, it is expected.
Generally, rubber users tend to increase stockpiles before the low production period which is currently in the offing in major producing states.
The February-May slump in production is attributed to wintering, when rubber trees shed leaves and latex output comes down. Thailand is undergoing this phase and this has significantly reduced market inflow of rubber.
Besides, La Nina has led to torrential rains in parts of Southeast Asia reducing supplies from Thailand, Indonesia and Malaysia; countries that constitute 70 percent of global natural rubber supply.
Meanwhile, India’s natural rubber output has surged 2.8% during the ten months ending January even as production stood at 749,950 metric tons between April and January, compared with 729,250 tons Y-O Y.
Output for January was at 98,800 tons compared to 97,500 tons a year earlier.
