* Jan Tokyo rubber futures rose most in a month since 1990
* Investors bet on China growth, Trump demand hike in US
* Rubber rise after China money lifted coking coal, iron ore
* Amid Thai supply concerns, prices seen high for months
* Tyre makers warn of price hikes to reflect higher costs
By Yuka Obayashi
TOKYO, Feb 6 First, Chinese speculators came for
coking coal and iron ore, catapulting markets into orbit. Now,
they're carpetbagging a different commodity, pushing it to its
fastest price rise in more than a quarter of a century - rubber.
Traders say Chinese investors are punting on global rubber
demand surging on revived growth in China stoking the auto
sector, allied with hope a President Trump stimulus will stoke
the U.S. economy. The world's biggest tyre maker, Bridgestone
, has already warned it may have to lift product prices.
These bets are likely to continue once China is fully back
in business after the Lunar New Year break, traders say. They
come just as output in key Southeast Asia producer countries
enters a seasonal drop - exacerbated by recent floods in
Thailand - and have made rubber an even hotter property than
top-demand commodities like lead and steel.
Asia benchmark rubber futures at the Tokyo Commodity
Exchange (TOCOM) hit their highest levels in more than
five years last week and climbed 26 percent in January before
giving up some gains during the Chinese New Year holiday - their
biggest monthly leap since at least 1990. That's already stoked
interest in new production in places like India.
"There was a round of speculation on rubber in China in
January," said Quan Shuwen, an analyst at the Shanghai office of
Japanese brokerage Okachi. "Supplies are quite tight, demand
from downstream enterprises is gradually getting stronger in
China, which will very likely further push up prices."
Over the past four months, rubber prices have more than
doubled in a wild swing propelled by China's cash-rich
investors, underlining their ability to move markets after
similar surges in commodities like coking coal and iron ore.
While uncertainties shroud what President Trump plans to do
to boost the U.S. economy, the bet isn't a blind wager as far as
China is concerned.
Beijing recently renewed incentives to boost demand for
smaller, environment-friendly cars in what is the world's
biggest auto market. It also introduced tighter rules on how
much freight trucks can carry, a move likely to increase demand
for trucks - and their tyres.
PRICES HIGH FOR MONTHS
The rally has been further fuelled by concerns over output
in Thailand, the world's biggest rubber producer. After flash
floods that affected the country's main rubber growing region,
the Rubber Authority of Thailand estimated it would cut the
country's rubber output in 2017 by 7.6 percent.
Thai rubber exporters say they have enough of the commodity
stockpiled to ensure only minimal disruption to scheduled
shipments. Still supply concerns linger, dealers said, as the
industry moves into its 'wintering season' - the dry winter
season from February to May in Thailand, Malaysia and Indonesia
when output drops.
"With wintering season approaching and healthy tyre demand
in China, prices will likely stay at high levels until March or
April," said Shinichi Kato, president of rubber material dealer
Shinichi Kato Office.
The spike in rubber prices hasn't gone unnoticed by farmers
elsewhere in Asia.
In India, industry officials told Reuters rubber output is
likely to jump 15 percent in 2017-2018, its highest in four
years, as the higher prices prompt farmers to start tapping
trees they had previously abandoned.
The rally, however, is bad news for tyre makers as it eats
into profits and trims margins - a hit that tyre makers in Japan
and South Korea warn that they may pass on to customers.
"It's our basic policy to raise tyre prices to reflect
higher raw material costs, but decisions will be made after
taking market conditions, including rivals' moves, into
account," said Fusamaro Iijima, a Bridgestone spokesman.
At a major Korean tyre maker, a person with knowledge of the
matter - speaking on condition of anonymity - said raw materials
price increases are typically reflected in end-product
prices two or three months down the line.
(Reporting by Yuka Obayashi; Additional reporting by Hallie Gu
in BEIJING and Jane Chung in SEOUL; Editing by Kenneth Maxwell)