Rubber Falls to Three-Week Low on Debt Crisis Fear, Thai Supply

By Aya Takada and Supunnabul Suwannakij

June 9 (Bloomberg) -- Rubber declined to a three-week low on concern that demand may weaken if Europe’s debt crisis worsens and as supplies from Thailand increased.

Futures in Tokyo decreased as much as 3.2 percent to the lowest level since May 18. The price declined for the second time in three days and is headed for a second weekly decline.

Asian stocks fell on concern that the sovereign-debt crisis will spread as Fitch Ratings called the U.K.’s fiscal challenge “formidable.” Global investors have little confidence in Europe’s efforts to contain the turmoil, with 73 percent calling a default by Greece likely, a Bloomberg survey showed.

“Europe’s debt crisis is the largest drag on the price,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today by phone. “Rubber is also losing support from fundamentals as supply from Thailand is growing seasonally.”

Rubber for November delivery lost as much as 8.5 yen to 253.6 yen per kilogram ($2,772 a metric ton) before closing at 260.2 yen. The commodity has dropped 5.7 percent this year.

The MSCI Asia Pacific Index fell 0.6 percent to 109.67 at 5:01 p.m. in Tokyo.

A quarterly poll of investors and analysts who subscribe to Bloomberg showed only 23 percent expect Europe’s almost $1 trillion rescue package to both keep the European monetary union together and prevent a debt default by a government. More than 40 percent say Greece is likely to abandon the euro.

“There is clearly a risk of a breakup of the euro,” said Geoff Marson, managing director at a unit of London-based Odey Asset Management, which oversees about $6 billion.

In Thailand, the world’s largest exporter, prices extended a decline for the sixth day as Chinese buyers continue delaying purchases, the Rubber Institute of Thailand said on its website today.

The free-on-board price of RSS-3 grade rubber for July delivery fell 1.3 percent to 115.1 baht a kilogram today.

“Thai supplies have increased and that puts pressure on the market,” Navarat Kaewpratarn, senior marketing official at Future Agri Trade Co., said by phone from Bangkok.

September-delivery rubber on the Shanghai Futures Exchange gained 1.3 percent to settle at 20,980 yuan ($3,072) a ton.

(bloomberg.com)