Surge in Oil Prices Benefits Rubber Futures in Tokyo
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In Tokyo, rubber futures escalated in 28 years to a record high as surging oil prices made manufacturing of synthetic rubber more costly, thus shifting traders’ attention to natural rubber.
As Chinese stockpiles, for an eleventh week, declined, and rubber was able to rise by as much as 3.4 percent. The reason why synthetic rubber is so tied up with oil is that it is made from a petroleum distillate called naphta.
Today Thailand, the biggest rubber exporter and manufacturer, raised offer prices due to slow production, increasing costs for the biggest car manufacturer of Japan — Toyota Motor Corp., and tire producer Bridgestone Corp., which forecasts that there will be decline in profit by 32 percent this year because of rising costs of raw material.
Being the fastest-growing major economy of the world, China is importing more and more rubber as economic growth pushes the demand for cars and trucks.
Photo Credit: chez_sugi
“Both natural and synthetic rubber are used for tires and increased prices are negative for earnings of tire makers and carmakers. Rising material prices may eventually weaken demand,” according to analyst Jun Nishimuta, Kanetsu Asset Management Co., Tokyo.
“Prices were also boosted by strong demand from China, where rubber stockpiles were drawn down to a very low level,” said strategist Kazuhiko Saito, Interes Capital Management Co., Tokyo.
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