Rubber declined for the first time in five days, retreating from a 27-month high as a drop in oil reduced its appeal and stockpiles in China, the largest consumer, gained to the highest level since April.
The most-active contract on the Tokyo Commodity Exchange, or Tocom, lost as much as 1.8 percent to 333.8 yen per kilogram ($4,113 a metric ton) before settling at 335.1 yen. The price reached 343 yen on Oct. 15, the highest level since July 2008.
Oil traded near a two-week low, weakening the appeal of natural rubber as an alternative to synthetic products used in tires. Commodities fell on speculation that builders in the U.S. started fewer homes in September and as a higher dollar against the euro curbed investor demand for raw materials as an alternative asset.
“Rubber retreated in tandem with other raw materials as a rally in commodities was so steep last week amid expectations for further monetary easing by the Fed,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.
Futures declined as supply in China increased. Inventories monitored by the Shanghai Futures Exchange expanded 901 tons to 37,801 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the bourse said on Oct 15. That was the highest level in almost six months.
Rubber futures in Shanghai slumped as much as 3.1 percent after stockpiles in China increased. March-delivery rubber declined to 31,060 yuan ($4,675) a ton before closing at 31,580 yuan. The price reached a record at 32,055 yuan on Oct. 15.
“Falling crude oil prices coupled with a strengthening Japanese currency pressured rubber prices on Tocom and Shanghai markets,” Chaiwat Muenmee, analyst at Bangkok-based commodity broker said by phone today. “If the oil price falls below $80 a barrel, it could drag rubber prices lower.”
Stronger Yen
The yen rose against all its major peers on speculation Japan will refrain from intervening to weaken its currency ahead of this week’s meeting of policy makers from Group of 20 nations.
Japan’s currency traded near the strongest level in more than 15 years versus the greenback before a report tomorrow forecast to show U.S. housing starts fell, supporting the case for additional monetary easing. The yen strengthened to 80.99 per dollar as of 3:58 p.m. in Tokyo from 81.45 in New York on Oct. 15 when it touched 80.88, the strongest level since April 1995 and near its post-World War II high of 79.75 yen reached the same month.
Losses in rubber futures were limited as heavier-than-usual rain in Southeast Asia and China curbed output. Supply in Thailand remains limited amid widespread rainfalls, according to the Rubber Research Institute of Thailand. Cash prices in Thailand dropped 0.2 percent to 119.75 baht ($4) per kilogram today, trading Tokyo market.
A severe drought in Yunnan at the beginning of this year and recent torrential rain in Hainan, the top two producing areas in China, will reduce domestic rubber output, according to Guo Cheng, an analyst at Yongan Futures Co.
Natural-rubber imports by China, the world’s largest user, jumped 19 percent from a month ago to 190,000 tons in September as the nation’s passenger-car sales to dealerships quickened from August on additional incentives.
(bloomberg.com)
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