Asian rubber futures rally on equities, Thai floods

TOKYO/SINGAPORE, Oct 24 (Reuters) – Tokyo rubber futures rallied nearly 5 percent on Monday while Shanghai futures hit limit-up on gains in equities and fears that more Japanese automakers would have to halt production in Thailand because of deadly floods there.

But Thailand’s worst flooding in five decades has had little impact on rubber supply, as many factories, plantations and trading are located in the south, which has not been affected by the deluge. Thailand is the world’s largest rubber producer.

“We haven’t heard that the floods have caused supply disruptions because the plantations are concentrated in the southern region,”said Naoki Asami, chief broker at trading house Kanetsu.

“A shortage of demand is more of a concern because many carmakers have halted production.”

The most active rubber contract on the Tokyo Commodity Exchange (TOCOM), currently March 2012 JRUc6, hit a high of 295.5 yen a kg, up from Friday’s 14-month low around 275 yen.

Shanghai rubber futures tracked TOCOM higher, with the most active January contract hitting limit-up at 26,465 yuan a tonne in active trade.

More districts of Thailand’s capital were on high alert on Monday with floods bearing down from northern Bangkok and authorities faced a race against time to pump water towards the sea and defend the business district.

High tech firms face delays in delivery of computer parts, and the auto sector has been badly affected, particularly Japanese firms, with output trimmed by 6,000 units a day.

Toyota Motor Corp has said it would suspend production in Thailand through Oct. 28 due to supply disruption from floods. Japan’s biggest automaker said it had lost production of 37,500 vehicles since output was halted on Oct. 10.

Physical dealers said gains in Tokyo and Shanghai rubber futures were mostly driven by gains in oil prices and Japanese shares as optimism grew over a solution to the euro zone debt crisis.

“The rains do not cause any disruptions in supply in Thailand,” said a physical dealer in Singapore.

The Nikkei stock average rose nearly 2 percent on Monday, shrugging off further yen strength and hits to production from Thailand’s floods, after the weekend yielded signs of progress on a plan to contain the euro zone’s sovereign debt crisis.

“TOCOM rubber just rose in line with share prices. People think demand should improve after the Eropean Union made some progress during the weekend meeting,” said a dealer in Thailand.

World stocks put in solid gains on Monday as investors bet on a positive outcome to the euro zone crisis talks and took comfort from signs that China’s economy may not be in as much danger as feared. (Reporting by Yuko Inoue, Lewa Pardomuan and Apornrath Phoonphongphiphat; Editing by Clarence Fernandez)

Source: http://finance.yahoo.com/news/UPDATE-1-Asian-rubber-futures-rc-1634863701.html