By Aya Takada
June 17 (Bloomberg) -- Rubber declined for the first time in six days as a drop in U.S. housing starts raised concerns that the economic recovery may slow and a stronger Japanese currency reduced the appeal of yen-denominated contracts.
Futures in Tokyo retreated after reaching a two-week high yesterday. Asian equities decreased after a U.S. Commerce Department report showed housing starts slumped 10 percent in May, the biggest drop since March 2009.
The yen advanced amid concern that Europe’s debt crisis will impair the region’s economic recovery, boosting demand for Japan’s currency as a refuge. Crude oil dropped from a six-week high, weakening the appeal of natural rubber as an alternative to synthetic products used to produce tires.
“Uncertainty about the economic outlook sapped investor interest in the commodity,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said by phone.
November-delivery rubber lost as much as 2.4 percent to 278.9 yen a kilogram ($3,056 a metric ton) before trading at 280.8 yen on the Tokyo Commodity Exchange at 11:55 a.m. local time. The price reached 286.7 yen yesterday, the highest level since June 1, after a report showed New York-area manufacturing expanded for an 11th month.
Rubber futures dropped to a three-week low of 253.6 yen on June 9 amid expectations that supply from Thailand, the world’s largest producer and exporter, will increase seasonally.
“Output in Thailand has been growing, leading to increased shipments by Thai exporters,” Sugata said.
Market ‘Uncertainty’
The free-on-board price of RSS-3 grade for July delivery reached 115.1 baht ($3.55) a kilogram on June 15, according to the Rubber Institute of Thailand. It retreated from a record high at 130.55 baht on April 27.
Japanese equities slid for the first time in six days after FedEx Corp. projected lower-than-estimated earnings and the government report showed U.S. housing starts dropped.
“Uncertainty over the market outlook and a loss of confidence have driven down the market,” said Mitsushige Akino at Tokyo-based Ichiyoshi Investment Management Co.
The yen strengthened against all 16 major counterparts on speculation European Union leaders will discuss ways to tighten financial-market regulation. The euro fell for a second day versus the dollar after Spain’s central bank said it plans to publish the results of stress tests carried out on the nation’s lenders in order to quell speculation that it needs international aid.
November-delivery rubber on the Shanghai Futures Exchange lost 2.9 percent to 21,455 yuan ($3,141) a ton at 10:34 a.m. local time. The market resumed trade today after a three-day public holiday.
(bloomberg.com)
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