Rubber declined as China stepped up measures to rein in liquidity, dimming demand prospects from the biggest user. The cash price in Thailand, the top supplier, rose to a record.
The July-delivery contract declined as much as 0.8 percent to 522.1 yen per kilogram ($6,277) and settled at 524.9 yen on the Tokyo Commodity Exchange. Earlier, it rose as much as 1.2 percent as crude oil gained on unrest in North Africa and the Middle East. Rubber reached a record 535.7 yen on Feb. 18.
“Measures to cool prices in China soured market sentiment, raising concern that demand may slow,” Sureerat Kunthongjun, an analyst at Agrow Enterprise Ltd., said by phone from Bangkok.
China’s central bank on Feb. 18 raised reserve requirements for lenders 10 days after boostinginterest rates as Premier Wen Jiabao tackles accelerating inflation and the risk of asset bubbles in the fastest-growing major economy.
The reserve ratios will be increased by half a percentage point from Feb. 24, the People’s Bank of China said on Feb. 18. Lending surged in January and inflation quickened as new home pricesrose in all but two of 70 cities monitored by the government, official reports showed last week.
Asian stocks fell, snapping three days of gains, after China implemented further measures to counter inflation, tempering gains by oil producers amid spreading unrest in the Middle East and North Africa.
Record Thai Price
The decline was limited as the low-production season has kicked in, and prices will remain high for the next one to two months, Sureerat said.
The physical price of Thai rubber was at 198.30 baht ($6.49) a kilogram today because of concern about declining supply during low-production season, according to the Rubber Research Institute of Thailand.
In Shanghai, May-delivery rubber gained 0.5 percent to close at 40,500 yuan ($6,162) a ton. The price climbed to a record 43,500 yuan on Feb. 9.
The low-output period is beginning in major growing areas in Thailand, the largest producer, supporting prices, Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said by phone. In some southern Thai estates, rubber trees have already started shedding leaves, leading to a halt in tapping, he said.
Farmers reduce tapping during the so-called wintering season, leading to lower latex production. Thai output drops as much as 60 percent from peak levels during the period, according to the Association of Natural Rubber Producing Countries.
Indonesia and Malaysia will enter the low-production period at about the same time. The two countries plus Thailand account for about 70 percent of global supply.
Rubber futures have gained 27 percent this year as demand outpaces supply after heavy rains and floods disrupted output in Southeast Asia. China’s passenger-car sales increased 16.2 percent to 1.53 million last month from a year earlier, the China Association of Automobile Manufacturers said on Feb. 18. Growth slowed from December’s increase of 18.6 percent.
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