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Aug 21: Rubber Set for Steepest Weekly Loss Since May on Demand Concern

Aug. 21 (Bloomberg) — Rubber is headed for the biggest weekly loss in 14 weeks as declining equity markets raised concern that the global economic recovery will be slower than expected, weakening demand for the commodity used in car tires.

Futures in Tokyo lost as much as 2 percent, heading for their worst week since the five days ended May 15. Asian stocks declined, led by shipping lines and automakers, as freight rates dropped and the U.S. announced the end of the “cash-for- clunkers” vehicle trade-in program.

“Recovery in demand may falter as governments cannot continue incentives to boost car sales for long,” Takaki Shigemoto, analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.

January-delivery rubber, the most-active contract, lost as much as 4 yen to 192.6 yen a kilogram ($2,051 a metric ton) on the Tokyo Commodity Exchange before trading at 195.6 yen at 11:46 a.m. local time. The contract has lost about 6 percent this week.

The “cash for clunkers” program offers buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. U.S. Transportation Secretary Ray LaHood said the program will close on Aug. 24 after having recorded transactions worth $1.9 billion in rebates.

Rubber futures gained about 44 percent this year as car sales increased on government subsidies in China, the U.S., Japan and Europe, raising speculation demand for the raw material will expand.

China Sales

China’s passenger-vehicles sales rose to 832,596 in July, up 70.5 percent from July last year, the China Association of Automobile Manufacturers said Aug. 7. The gain was the biggest since January 2006.

Car sales in China expanded more than 45 percent for the past three months after the government cut retail taxes and handed out subsidies to reverse a demand slump. General Motors Co., the largest overseas automaker in China, and Nissan Motor Co. both intend to add capacity in the country, which is set to surpass the U.S. as the world’s largest auto market this year.

January-delivery rubber on the Shanghai Futures Exchange lost 0.3 percent to 18,125 yuan ($2,653) a ton at 10:21 a.m. local time.

Source: Bloomberg

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« Aug 20: Asia Physical Rubber Up On Strong Demand
Aug 21: RUBBER-Tokyo futures fall as oil retreat, higher yen hurt »

This entry was posted on Friday, August 21st, 2009 at 2:15 pm and is filed under Rubber News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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