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Aug. 17 (Bloomberg) — Rubber tumbled by the most in seven months as Japan’s economy grew less than expected, raising concern that economic recovery may be weak, hindering growth in raw materials demand.
Futures in Tokyo fell by as much as 6.3 percent to the lowest level since Aug. 10. Japan’s economy expanded at an annual 3.7 percent pace last quarter, the first increase in five quarters. The median estimate of 22 analysts surveyed by Bloomberg News was for 3.9 percent growth.
“Investors sold futures as data showed economic growth was not as high as they had expected,” Takaki Shigemoto, analyst at Tokyo-based commodity broker Okachi & Co., said today by telephone. “They are becoming skeptical about the strength of economic recovery.”
January-delivery rubber lost 6 percent to settle at 195.6 yen a kilogram ($2,069 a metric ton) on the Tokyo Commodity Exchange, the biggest daily loss since Jan. 13.
The exchange suspended rubber futures trading for five minutes after prices fell 10 yen a kilogram, triggering the circuit-breaker system. Futures retreated from a 10-month high of 214 yen reached on Aug. 14.
Japan’s gross domestic product grew in April-June following an 11.7 percent decline in the previous quarter, the Cabinet Office said today in Tokyo. Exports led the expansion, jumping 6.3 percent from the previous three months.
Recovery
The Nikkei 225 Stock Average tumbled the most in four months on concern the recovery may not be sustained once the $2 trillion in worldwide stimulus that propped up sales for exporters runs out.
The Japanese data came after an unexpected decline in a U.S. consumer confidence index this month, adding to concern a revival in global growth may be slow, Shigemoto said. The Reuters/University of Michigan preliminary index of sentiment fell to 63.2 in August, the lowest since March, from 66 in July. Economists had forecast an increase to 69, according to the average estimate in a Bloomberg News survey.
A drop in crude oil aided the decline in rubber, Shigemoto said. Lower oil is negative for the price of futures as rival synthetic rubber is made from naphtha, distilled from petroleum.
Crude oil fell to a two-week low on speculation declining seasonal demand in the U.S. and rising stockpiles will ensure adequate supplies during the North Atlantic hurricane season. Oil fell 4.8 percent last week as reports showed refining and gasoline demand at their lowest in more than 12 weeks.
January-delivery rubber on the Shanghai Futures Exchange lost 4.7 percent to 18,460 yuan ($2,701) a ton. Earlier, prices fell by the daily limit to 18,390 yuan as inventories monitored by the bourse reached the highest level since January.
Rubber inventories increased 4,780 tons to 67,558 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai exchange said Aug. 14.
Source: Bloomberg