Bangkok: Rubber jumped the most in more than two years as supply tightened after the Thai government asked exporters to halt shipments and as Japanese tyre plants resumed production after last week's earthquake.
August-delivery futures climbed as much as 8.1 per cent, the most since January 5, 2009, to 399 yen (Dh18.62) a kilogram ($5,043 a metric tonne) on the Tokyo Commodity Exchange before trading at 398.6 yen at 2.15pm. The contract has surged 19 per cent from a four-month low of 335 yen on March 15 after Thailand's Deputy Prime Minister Suthep Thaugsuban asked exporters to suspend shipments to stem a plunge in prices and will ask banks to offer low-interest loans to help them stockpile the raw material.
"The Thai government intervention on exports is making rubber-sheet supply become tight, supporting the price," Kazunori Kokubo, general manager for the international business department at Yutaka Shoji Co said by phone from Tokyo.
Thailand, the largest producer, will negotiate with commercial banks to extend loans to exporters to buy unsmoked sheets from farmers at a minimum price of 120 baht ($3.96) a kilogram, said Suthep, who chairs the rubber policy committee.
The government will also encourage farmers not to sell below the minimum level, he said.
"The news provided positive psychological sentiment, prompting buyers to snap up the commodity," Pornthip Wongjirattikarn, marketing manager at Future Agri Trade Co., said by phone from Bangkok.
Free-on-board price
The free-on-board price, or cost without freight and insurance, for Thailand's benchmark ribbed smoked sheet gained for a second day, rising 3.6 per cent to 142.25 baht a kilogram boosted by the Thai government measures, according to the Rubber Research Institute of Thailand. Supplies have declined as the country entered low-production season, it said. The price reached a record 198.30 baht on February 21.
Rubber plunged from a record 535.7 yen reached February 18 as worsening Middle East tensions and slowing car sales in China, the largest buyer, raised concern that demand may decline. Losses intensified after the earthquake struck Japan, which is battling to prevent a meltdown at a stricken nuclear power plant.
"Demand in Japan is expected to recover after plants resume operations," Yutaka Shoji's Kokubo said.
Japan accounts for 7 per cent of global natural rubber demand. The closure of a handful of tyre plants in the country's northeast region for a few days won't impact global demand in a significant way, according to the Association of Natural Rubber Producing Countries. "If there is any marginal impact, it will be for the short-term only," the group said.
Operations resume
Bridgestone restarted three plants in Tochigi prefecture in eastern Japan yesterday, the company said in a faxed statement. Two of the plants will begin delivering tyres for cars, trucks and motorcycles from today, the company said. It closed the factories after the earthquake off the coast of Sendai, northern Japan on March 11.
Yokohama Rubber Co resumed partial production at five plants. A plant in Ibaraki prefecture damaged in the quake remains closed, the company said in a statement yesterday.
