Oct. 24 (Bloomberg) -- Rubber rallied from a two-week low after data showed China’s manufacturing strengthened more than anticipated this month, boosting the demand outlook for the world’s largest consumer of the commodity used in tires.
The contract for delivery in March added 0.5 percent to settle at 262.7 yen a kilogram ($2,699 a metric ton) on the Tokyo Commodity Exchange. Futures earlier fell to 257.8 yen, the lowest level since Oct. 8.
The preliminary 50.9 reading for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compared with a 50.4 median of estimates from analysts surveyed by Bloomberg. Readings above 50 indicate expansion. China’s growth accelerated to 7.8 percent last quarter.
“Recovery in China’s economy will support demand,” said Naohiro Niimura, a partner at research company Market Risk Advisory in Tokyo.
Global rubber consumption will grow at an average of 3.5 percent a year through 2018 as demand increases for replacement tires, supporting prices of the commodity, according to LMC International Ltd.
Rubber for January delivery on the Shanghai Futures Exchange rose 0.2 percent to close at 20,145 yuan ($3,312) a ton. Thai rubber free-on-board lost 0.5 percent to 79.15 baht ($2.54) a kilogram today, according to the Rubber Research Institute of Thailand.
--With assistance from Ranjeetha Pakiam in Kuala Lumpur. Editors: Ovais Subhani, Jarrett Banks