Rubber tumbled the most in more than a week as a reduction in Greece’s credit rating and a selloff in global equities boosted concern that the economic recovery may falter, curbing demand for the commodity used in tires.
The October-delivery contract lost as much as 4 percent to 363 yen a kilogram ($4,429 a metric ton) before settling at 367.9 yen on the Tokyo Commodity Exchange. The contract gained 1.8 percent last week, the second weekly advance.
Asian stocks extended a global decline, with the regional benchmark index heading for a two-month low, as Fitch Ratings cut Greece’s credit rating three levels and the euro weakened, reducing the outlook for export earnings. The index of U.S. leading indicators slipped in April after nine months of increases, while manufacturing in the Philadelphia area grew in May at the slowest pace in seven months.
“Concern about U.S. and European economies spurred sales of industrial commodities,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone. “Rubber was sold in tandem with oil and base metals.”
Fitch Ratings cut Greece three levels to B+, four steps below investment grade, from BB+. Fitch said even a “soft” restructuring of debt being studied by European Union policy makers would be considered a default. Fitch said Greece could face a further reduction in its creditworthiness.
“The biggest concern about Europe is the risk of contagion and of credit markets drying up globally,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The memory of the global financial crisis is fresh in everyone’s mind, and everybody’s preference is that we don’t go there again.”
China Demand
“Supply is outpacing demand and declining inventories in China reflects that orders from there are still low,” said Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures Co.
Natural-rubber stockpiles monitored by the Shanghai Futures Exchange fell 215 tons to 13,946 tons last week, the bourse said on May 20. Inventories reached 11,851 tons earlier this month, the lowest level since 2003.
Rubber also declined amid expectation that supply from Thailand, the world’s largest exporter, will increase as the low-production period is set to end this month, Saito said.
Natural-rubber output will expand as farmers resume harvesting after the traditional low-production season, easing global supplies, the Association of Natural Rubber Producing Countries said in a monthly report in April.
Production from its member countries, representing 92 percent of global supply, may climb 10.5 percent to 2.3 million tons in the three months through June, the report said. Output in the first quarter is estimated to have advanced 6.1 percent to 2.27 million tons, the group said.
The physical price of Thai rubber declined 0.3 percent to 154.25 baht ($5.08) a kilogram today, according to the Rubber Research Institute of Thailand.
In Shanghai, September-delivery rubber lost 2.1 percent to close at 30,830 yuan ($4,741) a ton.
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