"Bullish fundamentals keep supporting rubber prices," Kazunori Kokubo, general manager at Tokyo-based broker Yutaka Shoji Co., said today by phone. "Futures in Tokyo still look undervalued when compared with the physical rubber market."

The Thai cash price remained at a record 169.30 baht ($5.53) per kilogram, supported by strong demand amid tight supplies and lower stockpiles in China, the Rubber Research Institute of Thailand said today.

Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on Jan. 14. That's 55 percent lower than last year's peak of 151,832 tons.

Rubber production in Thailand during the leaf-shedding season, which runs until May, shrinks by 45 percent to 60 percent from peak production, the Association of Natural Rubber Producing Countries has said. The low-production period also occurs at the same time in northern Indonesia and Malaysia, lowering output, the group said.

Eoin Treacy's view Rubber is not traded in the UK or USA and therefore does not often appear in analyst commentary in this part of the world. However, it remains an essential commodity for industry and consumers alike and prices are accelerating higher. The Japanese traded contract hit a new 20-year high in November and continues to extend its advance. The pace of the advance is unsustainable beyond the short term, but a reaction of greater than ¥40 would be required to indicate supply is beginning to regain the upper hand. The Shanghai and Singapore contracts are similarly overextended. (Also see Comment of the Day on November 10th and December 29th).

Rubber is one many commodities hitting new nominal highs and breaking inflation adjusted downtrends. This activity continues to put upward pressure on a range of inflationary measures, particularly in Asia. A number of the shares reviewed below initially benefitted from their ability to pass rising input prices on to consumers. However, it is questionable whether they can continue to do so when the raw material price is advancing so quickly. Companies that have hedged at least part of their requirement will be enjoying a competitive advantage.

Hankook Tire remains in a relatively consistent medium-term staircase uptrend and has been consolidating mostly above KRW30,000 since October. A sustained move below KRW28,000 would be required to question demand dominance.

Pirelli has paused in the region of €6 for the last few months but would need to sustain a move below the 200-day MA to question medium-term upside potential. Continental has a similar pattern.

Goodyear Tire & Rubber broke its medium-term progression of lower rally highs in December and a sustained move below $11.50 would be required to question scope for some additional higher to lateral ranging.

Cooper Tire & Rubber has now pulled back to test the upper side of a yearlong range and needs to hold above $20 if medium-term demand dominance is to be sustained.

Nexen is currently rallying towards the upper side of the 18-month range and needs to sustain a move above $25 to indicate a return to medium-term demand dominance.

Titan International has been consolidating mostly below $20 since December and pushed back above that level this week. This has so far been a relatively similar sized reaction and a sustained move below $17.80 would be required to question medium-term upside potential.

Consumer goods companies such Church & Dwight and Reckitt Benckiser, both with an interest in rubber gloves and condoms, share a similar pattern. They have both been consolidating above their pre-crisis peaks, recently found support in the region of their 200-day MAs and are retesting their December highs.

Ansell Ltd lost momentum as it approached the 2008 peak near A$14 and broke its progression of higher reaction lows in December. It needs to hold above last week's low near A$12.30 to offset scope for a deeper corrective phase.