Rubber drops as Egypt unrest reduces appeal

Rubber dropped as a strengthening Japanese currency and unrest in Egypt reduced the appeal of the commodity used to make tyres. Futures in Shanghai reached an all-time high.

The July-delivery contract declined as much as 0.8% to 465.4 yen a kg ($5,673 a tonne) before settling at 466 yen on the Tokyo Commodity Exchange. The most-active contract earlier rose 1.4% and surged 12% this month, the seventh monthly advance. The May-delivery contract in Shanghai advanced to 41,850 yuan ($6,350) a tonne.

Japan’s currency traded near a one-week high against the euro on speculation Egypt’s political turmoil will destabilise the West Asia, spurring demand for safer assets. “The global economy has entered into a stage of uncertainty,” Ker Chung Yang, an analyst with Phillip Futures Pte., said by phone from Singapore. The unrest in Egypt has spurred concern of a contagion effect, he said.

Oil surged 4.3% on January 28, the most since September 2009, after clashes between police and protesters demanding an end to Egyptian President Hosni Mubarak’s 30-year regime. The crisis stoked concern that anti-government protests may spread to other Middle Eastern nations, slowing global economic growth, said Kazuhiko Saito, an analyst at Fujitomi Co.

Egypt’s President Hosni Mubarak met with top military commanders yesterday as tens of thousands of protesters defied a curfew and gathered in central Cairo, chanting slogans against his new prime minister and vice president. The unrest in Egypt followed an uprising that led to the January 14 overthrow of Tunisian president Zine El Abidine Ben Ali.

“Some investors locked in profits ahead of Chinese New Year,” said Wanwilai Choilek, manager at the Hadyai, Thailand branch of commodity broker DS Futures. “Demand is still there but subsiding ahead of the holidays.”

The physical price of natural rubber  in Thailand gained 0.7% to 177.80 baht ($5.71) per kg on Monday, according to Rubber Research Institute of Thailand. The price reached a record of 181.55 baht on January 25.

Increasing rain in the country’s southern provinces ahead of the low-production season will limit supply, while rising car sales have boosted the demand outlook, the institute said.

Rubber demand may grow 4.6% this year, boosted by strong vehicle sales, with consumption continuing to outpace supply in coming years, according to the International Rubber Study Group. Natural-rubber consumption in China may rise to 3.6 million tonne this year and India’s consumption may gain 5.2% to 9,91,000 tonne, according to the Association of Natural Rubber Producing Countries.

China’s natural-rubber inventories dropped for a third week, down 6,985 tonne to 58,547 tonne, according to a survey.

(Source: http://www.financialexpress.com/news/rubber-drops-as-egypt-unrest-reduces-appeal/744306/0)