Bloomberg News

Rubber Rises After Bank of Japan Commitment to End Deflation

January 22, 2013

Rubber rose after the Bank of Japan (8301) announced open-ended asset purchases and adopted a 2 percent inflation target.

Rubber for delivery in June gained as much as 1 percent to 314.7 yen a kilogram ($3,523 a metric ton) before trading at 312.2 yen at 2:45 p.m. on the Tokyo Commodity Exchange. Futures have advanced 3.2 percent this year.

The BOJ said it will buy about 13 trillion yen in assets per month from January 2014, including about 2 trillion yen in Japanese government bonds and about 10 trillion yen in treasury bills. The move to double the inflation goal was forecast by 21 of the 23 economists surveyed by Bloomberg. The Japanese yen gained after the outcome, reversing earlier losses.

Rubber is also being supported by optimism that Chinese buyers will build up stockpiles ahead of New Year holidays and after Thailand, the biggest producer, approved funding for the state rubber purchase program, said Chaiwat Muenmee, an analyst at DS Futures Co. in Bangkok.

The Thai government yesterday approved a plan by Rubber Estate Organization to disburse 5 billion baht ($168 million) from the state-run Bank for Agriculture & Agricultural Cooperatives to continue the rubber purchase program, government spokesman Tossaporn Serirak said. Thailand has spent 17.4 billion baht in buying 182,446 tons of rubber from farmers above market rates, he said yesterday.

Rubber for delivery in May rose 1.3 percent to 26,095 yuan ($4,195) a ton on the Shanghai Futures Exchange. China imported 2.18 million tons of natural rubber last year, a rise of 3.6 percent on year, according to the Beijing-based Customs General Administration.

Thai rubber free-on-board was unchanged at 98.70 baht ($3.32) a kilogram today, according to the Rubber Research Institute of Thailand.

To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net; Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net


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