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Aug. 5 (Bloomberg) — Rubber dropped for the first day in five on speculation demand for the commodity used in tires may weaken after prices rallied to the highest in nine months.
Futures in Tokyo fell as much as 2.5 percent after yesterday reaching the highest level since Nov. 5. Prices gained 8.1 percent in the previous four sessions on signs a slump in the global economy is easing, raising optimism raw material demand may grow.
“Futures were capped by concern buyers may not chase the price rally as the recent increase went too far, too rapidly,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today in a telephone interview.
January-delivery rubber lost as much as 5 yen to 191.7 yen a kilogram ($2,018 a metric ton) before closing down 1.1 percent at 194.5 yen on the Tokyo Commodity Exchange. The 14-day relative strength index for rubber futures, a gauge of momentum, has climbed above 70 since July 31, a level some investors use as an indicator that prices may decline.
Losses were limited as a gain in crude oil boosted the cost of making rival synthetic rubber. Oil rose after an industry- funded report showed a decline in crude inventories in the U.S., the world’s biggest energy consumer.
Rubber futures have advanced 43 percent this year as demand in China, the world’s largest consumer, increased on rising car sales and as exporters curbed shipments to balance supply with weaker global demand.
Honda Production
Honda Motor Co., Japan’s second-biggest carmaker, will increase global vehicle production as emerging markets lead a recovery in auto demand. Honda will build about 90,000 vehicles more than initially planned this year in response to higher- than-forecast sales in China, Thailand, India, Indonesia and Brazil, Chief Financial Officer Yoichi Hojo said in an interview today.
Sales in China are increasing on government stimulus spending and a recovery in the economy, Hojo said. In the first six months of the year, the company’s sales in the country rose 12 percent, capped by a 54 percent jump in June.
Thailand, Indonesia and Malaysia, the largest rubber producers, will cut shipments by as much as 48,000 tons a month in the second half, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said July 15.
Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, advanced 0.3 percent to settle at 18,820 yuan ($2,755).
Source: Bloomberg