Rubber Seen Rising 32% as Biggest Demand in Decade Drives Michelin Prices - Bloomberg

Rubber’s 15 percent slump in about a week may be the prelude to rallies to a record high, driving up the cost of everything from Michelin tires to surgical gloves.

Harvests in Thailand, Indonesia and Malaysia, the biggest growers, will fail to meet demand for a second year in 2011, leaving stockpiles equal to 69 days of demand, the lowest in more than a decade, Goldman Sachs Group Inc. estimates. Prices may advance as much as 32 percent to 605 yen a kilogram ($7,407 a metric ton) by December, according to the median estimate in a Bloomberg survey of 10 analysts and traders.

Bridgestone Corp. and Michelin & Cie., the world’s biggest tire makers, are boosting prices by as much as 15 percent, and Top Glove Corp., the largest rubber-glove producer, is charging more. The rally in rubber mirrors the 93 percent advance in the S&P GSCI Agriculture Index since its June low caused by floods from Canada to Australia and droughts in China and Russia.

While that’s bad news for consumers, it means “the best price I’ve ever seen,” said Saneh Panpipat, 54, who tends about 2,000 rai (320 hectares) of rubber trees in southern Thailand, the country’s main growing region. “My staff and many farmers who were unable to afford their own cars now have brand-new Toyota or Isuzu pickup trucks.”

Heavier-than-usual rain in Southeast Asia, which supplies 70 percent of the world’s rubber, disrupted harvests in the past several months. While farmers will increase supply by 9 percent this year, they won’t eliminate shortages, as demand advances to its highest level since at least 2000, according to the team of Goldman analysts, led by Tokyo-based Yuichiro Isayama. more ...