Rubber Retreats on Strong Yen, Concern Slowing Economy May Weaken Demand

Rubber declined as the Japanese currency strengthened and on concern that demand for the commodity used to make auto tires may weaken.

January-delivery rubber in Tokyo fell as much as 1.3 percent to 277.2 yen a kilogram ($3,230 a metric ton) on the Tokyo Commodity Exchange before trading at 278.8 yen at 11:06 a.m. local time. The contract lost 0.5 percent last week, the first weekly drop in four.

“The dollar is weakening against the yen and stocks are coming down, so sentiment isn’t so strong today,” Roka Komiya, rubber trader at Marubeni Corp. in Singapore, said today. Investors are also concerned that the global economic recovery may be slowing, reducing demand for rubber, he said.

The yen rose against all of its major counterparts after a report showed Japan’s gross domestic product grew at a slower- than-expected pace and before data forecast to show German investor confidence fell.

Japan’s GDP expanded at an annualized 0.4 percent rate in the three months to June 30, according to government data today. That compares with the median economist estimate for 2.3 percent growth in a Bloomberg News survey.

Rubber stockpiles in Japan expanded to 3,275 tons as of July 31 from a record low of 2,628 tons on July 20, according to Rubber Trade Association of Japan data.

Natural rubber inventories in China expanded for a third week by 1,667 tons to 21,875 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Aug. 13.

“Higher stockpiles reflected improved car sales in China, which will help cushion any downside in the market today,” Varut Rungkhum, an analyst at Agro Wealth Ltd., said today by phone from Bangkok.

China’s auto sales may rise to 16 million this year, the China Association of Automobile Manufacturers said Aug. 10, boosting its forecast from a previous estimate of 15 million. China’s passenger-car sales rose 13.6 percent to 946,200 in July, the association said.

January-delivery rubber in Shanghai dropped 0.8 percent to 24,640 yuan ($3,622 a ton). 

(bloomberg.com)