Rubber in Tokyo tumbled for a second day after climbing to a record last week on concern that China, the largest user, may increase borrowing costs to curb inflation, reducing demand for the commodity used to make tires and gloves.
April-delivery rubber on the Tokyo Commodity Exchange declined as much as 4.3 percent to 344.6 yen per kilogram ($4,173 a metric ton) before trading at 351 yen at 10:28 a.m. local time. The contract fell as much as 5.7 percent on Nov. 12. The May-delivery contract in Shanghai fell by the daily limit to 33,415 yuan ($5,034) a ton.
“Investors are still in a selling mood on speculation that China may raise interest rates, which would cut demand for rubber,” Varut Rungkhum, an analyst at commodity broker Agro Wealth Ltd., said today by phone.
China’s government may step up measures to contain growth in housing and consumer prices after inflation accelerated to a two-year high last month. Inflation quickened to 4.4 percent in October from 3.6 percent in September, the statistics bureau said Nov. 11.
“China may raise interest rates by the end of this year,” stoking concerns that natural-rubber consumption may decline, Gu Jiong, an analyst at commodity broker Yutaka Shoji, said today by phone from Tokyo.
Rubber futures in Tokyo have gained 27 percent this year as producers have had difficulty catching up with growing demand because of rain and flooding that disrupted latex output in Southeast Asian countries.
China Inventory
China’s natural-rubber inventories increased 10,735 tons last week to 60,291 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said Nov. 12.
The cash price in Thailand, the largest producer and exporter, remained at a record 132 baht ($4.43) per kilogram on Nov. 12 as heavy rainfall affected supply, according to the Rubber Research Institute of Thailand.
Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total production this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association. Annual supply may fall by 50,000 tons over the next seven years until new trees mature and produce latex, association President Luckchai Kittipol said.
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