Sept. 25 (Bloomberg) — Rubber dropped for a third day to the lowest level in more than a week after crude oil slumped to a one-month low, reducing the commodity’s appeal as an alternative to synthetic products made from petroleum.

Futures in Tokyo fell as much as 3.1 percent and posted a second weekly loss. Investors also sold the commodity as an unexpected drop in U.S. home sales raised concern the economic recovery may falter, curbing demand for the raw material used to make tires.

“Worse-than-expected U.S. data stoked concern that the economy may resume a contraction,” said Takaki Shigemoto, a commodity analyst at Tokyo-based research company TOS. “Rising rubber inventories in China also capped the price of futures,” he said today by phone.

February-delivery rubber lost as much as 6.2 yen to 191.1 yen a kilogram ($2,106 a metric ton) before settling at 195.5 yen on the Tokyo Commodity Exchange. Prices fell 3.7 percent this week, extending last week’s 5.6 percent drop, the largest loss since the week ended Aug. 21.

March-delivery rubber, which listed on the Tokyo exchange today, rose to 197.6 yen from its opening price at 193.7 yen.

Crude oil for November delivery traded at $66.29 a barrel on the New York Mercantile Exchange as of 3:42 p.m. Tokyo time. The futures, which dropped 4.5 percent yesterday, are headed for the biggest decline since the week ended July 10.

Oil was sold as a stronger dollar reduced investor interest in the commodity as an inflation hedge. The dollar advanced as signs of a slow recovery from the recession reduced demand for higher-yielding assets funded in the greenback.

Goods Orders

Orders for U.S. durable goods, meant to last several years, increased 0.4 percent in August after rising 5.1 percent the previous month, according to the median forecast of 75 economists surveyed by Bloomberg News. The Commerce Department’s report is due for release at 8:30 a.m. in Washington.

Adding to signs of a slow recovery, the National Association of Realtors reported yesterday that purchases of existing U.S. homes decreased 2.7 percent in August to a 5.10 million annual pace.

Rubber also declined as rising stockpiles in China stoked concern that demand in the world’s largest consumer may slow.

Inventories increased 118 tons to 91,669 tons, the highest level since March 2008, the Shanghai Futures Exchange said on Sept. 18, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

Natural rubber imports by China rose 2.4 percent from a year earlier to 1.15 million tons in the eight months ended Aug. 31, data from the Beijing-based Customs General Administration showed Sept. 22. The rate of increase slowed from 3.2 percent in the first seven months of this year.

Rubber gained 44 percent this year as surging car sales in China, the world’s largest user, spurred investor buying. China’s passenger-car sales rose a record 90 percent last month, according to the China Association of Automobile Manufacturers.

January-delivery rubber on the Shanghai Futures Exchange added 0.5 percent to settle at 16,900 yuan ($2,475).

Source: Bloomberg

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