Thai benchmark RSS3 rubber rose to $3.25 a kg on Wednesday, revisiting a 56-year peak scaled in mid-2008 on gains in Tokyo futures and prospects of demand from tyre makers and Chinese buyers, dealers said. Speculative buying driven by strong oil and steady physical demand have sent the most active rubber contract on the Tokyo Commodity Exchange, currently June 2010, to a 16-month high, lifting cash prices in Southeast Asia.

Goodyear Tire & Rubber and Bridgestone Corp were buying rubber at above $3 a kg, while Singapore dealers, who normally sell the commodity to top consumer China, were also active in the physical market, they said. "Most traders here in Hat Yai offer RSS3 at around $3.20 to $3.25 per kg today.

That's a reasonable price and demand remains strong," said a dealer in Thailand's rubber centre. At more than $3 a kg, rubber prices in Southeast Asia are up six-fold from the start of this decade and at their highest level since 1952, when the Korean War sparked a commodity boom. "It's a hot market and it will keep going up," said a physical dealer in Singapore.

Copyright Reuters, 2010