Rubber slumped for a fourth day, the longest losing streak since July 1, as crude oil extended losses and the Japanese yen gained on concern the global economy is slowing, eroding the appeal of the commodity used to make tires.
January-delivery rubber in Tokyo declined as much as 1.5 percent to 273.6 yen a kilogram ($3,217 a metric ton), the lowest level since Aug. 2, and traded at 273.8 yen on the Tokyo Commodity Exchange at 10:58 a.m. local time.
“Lower oil prices, declining equities, concern over a slowing global economy and the yen’s strength have dragged rubber lower,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. “A slowdown in demand during the summer holiday season also pressures prices.”
Crude oil for September delivery dropped 1.1 percent to $77.17 a barrel in New York at 10:59 a.m. Tokyo time. Yesterday, the contract fell 2.8 percent to $78.02, the lowest settlement since July 28. Lower oil prices make natural rubber less attractive against rival synthetic products made from petroleum.
Oil slumped yesterday as U.S. equities declined after China’s industrial output grew by the least in 11 months and the Federal Reserve said the U.S. recovery is decelerating. The Standard & Poor’s 500 Index fell 2.8 percent, the most since July 16, when consumer confidence slid to a one-year low, to 1,089.47 yesterday.
The yen climbed to 85.14 per dollar from 85.32 in New York yesterday, when it touched 84.73, the strongest since July 5, 1995. A stronger Japanese currency reduces the appetite for yen- based contracts.
The Japanese currency appreciated against all of its 16 major counterparts before a European report today that may show industrial production grew at a slower pace and after U.S. data yesterday showed a widening trade deficit.
January-delivery rubber in Shanghai declined 1.9 percent to 24,205 yuan ($3,563) a ton, retreating for a second day.
(bloomberg.com)
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