Purchases by tyre makers, steady demand from main consumer China, tight supplies in Southeast Asia and high oil prices are expected to push up rubber prices in June, a Reuters poll showed on Monday. The benchmark rubber contract on the Tokyo Commodity Exchange, currently November 2009, was forecast at 175.0 yen per kg by the end of June.
According the median forecast of 10 analysts and dealers polled by Reuters. That was 5.2 percent higher than the previous forecast of 166.3 yen per kg at the start of May. "I expect basically an upward trend in June, supported by an improvement in fundamentals," said a manager at a trading firm in Tokyo.
"Tyre makers have finished inventory adjustments and their buying is returning. Also, physical supply is seasonally tight." Tokyo's November contract added 2.4 yen per kg at 171.7 yen, having hit an intraday high of 172.3 yen, its strongest since mid-May as crude oil struck another seven-month high.
Unseasonal rains have disrupted tapping in some rubber growing areas in Thailand, the world's biggest producer but supply was expected to improve in July, dealers said. Tyre makers, such as Bridgestone, Goodyear and Michelin, are chasing forward shipments, while China is still around to buy tyre grades from Thailand, Indonesia and Malaysia, they said.
"China has been buying and I expect demand should remain firm for the whole year," said a dealer in Malaysia. China, the world's biggest rubber importer, has been a bright spot for an otherwise gloomy global auto industry. China's passenger car sales in April rose 37.4 percent from a year earlier to a record high, the country's official industry association said on Friday, bolstered by government stimulus measures.
General Motors Corp expects its sales in China, which has overtaken the United States as the world's largest auto market, to grow 5 to 10 percent this year. TOCOM rubber was also expected to get support from rising prices for oil, which is used to make synthetic rubber. A rise in oil prices usually encourages users to shift to natural rubber.
"The market will likely test the 180 yen level in coming weeks," said a manager at a Japanese commodity brokerage, referring to a level last seen in November. "A driver for that rally would be a series of buy-backs by those who had sold futures on bearish views on the demand side. Now that any price falls invited buying by major tyre makers in the physical market, such bearish views look no longer feasible."
SOFTER PRICES IN JULY But rubber supplies from Thailand and Malaysia were expected to rise gradually in July as the rains ease, putting pressure on Tokyo futures, dealers said. "Supply should be okay in July and we should see a drop in both futures and physical prices," a trader at Thailand's Hat Yai rubber centre said.
The benchmark TOCOM rubber price could fall to 168.8 yen per kg by end-July, according to the poll. On the physical front, Thai RSS3 was forecast to slip to $1.70 a kg by the end of July from $1.75 by the end of June. Malaysia's SMR20 could fall to $1.60 a kg and Indonesia's SIR20 to $1.53 by the end of next month.
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