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Jan. 15 (Bloomberg) — Rubber fell from a 16-month high as an unexpected decline in U.S. retail sales dented confidence in the strength of the economic recovery, damping demand for the raw material used in tires.
Futures in Tokyo fell as much as 2.2 percent after reaching the highest level since September 2008. Prices also dropped as crude oil in New York declined for a fifth day, weakening the appeal of natural rubber as an alternative to synthetic products made from petroleum.
?€?The U.S. data raised concern that the economic recovery may not be so strong,?€ Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. ?€?Declining oil was another drag on the price of rubber.?€
Rubber for June delivery lost 1.9 percent to settle at 298.1 yen per kilogram ($3,274 a metric ton) on the Tokyo Commodity Exchange. The contract earlier rose to 306 yen, the highest level since Sept. 9, 2008.
U.S. sales dropped 0.3 percent last month, the Commerce Department said yesterday. Economists expected a 0.5 percent gain, the median of 80 estimates in a Bloomberg survey.
Crude oil for February delivery lost 0.4 percent to $79.09 a barrel at 3:11 p.m. Singapore time, poised for the first weekly decline in five weeks. Prices fell after weekly jobless claims in the U.S., the world?€?s largest oil-consuming nation, climbed 2.5 percent, the most in five weeks.
?€?Major Factor?€?
?€?A decline in crude oil price was a major factor bringing down the rubber price,?€ Pornthip Wongjirattikarn, marketing manager at Future Agri Trade Co., said by phone from Bangkok. ?€?Selling emerged after the TOCOM price failed to stand above 300 yen.?€
Rubber futures have gained 8 percent this month, after doubling last year, as rising car sales in China, the world?€?s largest consumer, boosted demand for the commodity used in tires.
China overtook the U.S. in 2009 as the world?€?s largest automobile market with sales surging 46 percent to 13.6 million, according to the China Association of Automobile Manufacturers. Ford Motor Co. and Honda Motor Co. are running their Chinese factories at full capacity, and still can?€?t deliver enough cars.
Thailand, Indonesia and Malaysia, the world?€?s three biggest rubber producers, are drawing up a plan to support prices should they decline to less than $2,600 a ton and are set for a ministerial meeting on Jan. 19 in Kuala Lumpur.
Indonesia and Thailand have agreed in principle to the plan, which may involve buying and stockpiling rubber if it falls to less than that level, according to Apichart Jongskul, secretary- general of Thailand?€?s Office of Agricultural Economics.
Rubber for May delivery on the Shanghai Futures Exchange tumbled as much as 3.7 percent to 24,820 yuan ($3,636) a ton, before settling at 25,290 yuan. It climbed to 26,170 yuan on Jan. 11, the highest level since July 2008.
Source: Bloomberg