Rubber Advances as Yen Suffers Decline

Rubber advanced to a one-week high as a drop in Japan’s currency raised the appeal of yen-based contracts and as Sumitomo Rubber Industries announced an expansion in overseas tire production to meet growing demand.
The October-delivery contract climbed as much as 3.1 percent to 382 yen per kilogram ($4,692 per metric ton), the highest level since May 11, before settling at 381.4 yen on the Tokyo Commodity Exchange on Tuesday.
The yen reached a two-week low against the dollar as European finance officials meeting in Brussels endorsed a bailout for Portugal, boosting confidence the region’s debt crisis will be contained. Sumitomo Rubber, the second-largest Japanese tiremaker, said on Tuesday that it would spend 28 billion yen to build a plant in Brazil as demand is rising in the Central and South American markets.
“Auto sales in emerging markets will keep expanding, providing more support to rubber demand and prices,” said Hisaaki Tasaka, an analyst at broker ACE Koeki Co.
Sumitomo Rubber plans to start production in October 2013 at the Brazilian plant that will have a daily capacity of 15,000 tires, the company said.
The yen declined to 81.43 per dollar at 3:45 p.m. in Tokyo from 80.79 in New York on Monday. It was also sold against the euro amid speculation the European Central Bank would add to last month’s interest-rate increase on signs of accelerating price pressures in the region.
Thailand’s rubber market has been closed since May 13 for a public holiday. The physical price of Thai rubber fell to 154.50 baht ($5.11) per kilogram on May 12 from 155.50 baht on May 11, according to the Rubber Research Institute of Thailand.
Bloomberg