Rubber Fluctuates as Yen Drops, Japan’s Car Sales May Decline

By Aya Takada

July 26 (Bloomberg) -- Rubber fluctuated as a weaker Japanese currency raised the appeal of yen-based contracts amid concern that Japan’s car sales may decline after the government ends a subsidy program for fuel-efficient models.

Futures in Tokyo dropped as much as 0.4 percent after advancing to a two-week high. The yen declined amid optimism that the Asian economic recovery remains intact, damping demand for Japan’s currency as a refuge.

Investor appetite for rubber futures was curbed by speculation that demand for the commodity used to make tires may decline as the Japanese government will end subsidy payments to buyers of fuel-efficient cars in September, said Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co.

“Concern about demand is the largest drag on the price of rubber futures,” Saito said by phone today.

December-delivery rubber lost 0.6 yen to 265 yen per kilogram ($3,024 a metric ton) on the Tokyo Commodity Exchange at 11:15 a.m. local time. Earlier, it rose to 267.9 yen, the highest level since July 12.

Japan won’t extend a subsidy program for buyers of eco- friendly cars, Nikkei Telecom 21 reported on July 23, citing Masayuki Naoshima, minister for economy, trade and industry. The program is scheduled to end at the end of September, he said.

Toyota Motor Corp. and Honda Motor Co., Japan’s two biggest carmakers, led an eleventh-straight increase in domestic monthly auto sales in June as government incentives boosted demand.

Sales of cars, trucks and buses, excluding minicars, climbed 21 percent to 293,537 vehicles in June from a year earlier, the Japan Automobile Dealers Association said July 1.

Losses Limited

Losses in rubber futures were limited as the nearby contract extended gains after an 11 percent surge on July 23 amid speculation that low stockpiles in Japan may make physical delivery difficult at its expiry today.

July-delivery rubber gained 0.7 percent to 400 yen as of 9:11 a.m. local time. It surged after data showed last week that natural-rubber stockpiles monitored by the Tokyo exchange dropped by 29 percent to 1,341 tons as of July 10. It was the lowest level since at least 2001, according to exchange spokesman Seiki Ichimura.

November-delivery rubber on the Shanghai Futures Exchange was little changed at 22,200 yuan ($3,275) a ton at 10:36 a.m. local time.

(bloomberg.com)