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Rubber Falls to Two-Week Low as Oil, Equity Decline Cut Demand
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Aya Takada and Supunnabul Suwannakij
March 4 (Bloomberg) — Rubber declined to a two-week low as falls in equities and crude oil prices reduced the appeal of the commodity used in tires.
Futures in Tokyo lost as much as 1.8 percent to 284.5 per kilogram ($3,226 a metric ton), the lowest level since Feb. 16. Asian stocks fell for the first time in five days on concern the Chinese government’s tighter control over credit expansion will hurt economic growth.
“Stringent rules in China have sparked concerns that growth in its industrial sector may slow and that may also hurt demand for rubber,” Chaiwat Muenmee, analyst at DS Futures Co., said by phone from Bangkok.
Rubber for August delivery declined as much as 5.2 yen to 284.5 yen before settling at 294.6 yen on the Tokyo Commodity Exchange.
China’s banks loaned a record 9.59 trillion yuan ($1.4 trillion)last year to support the government’s economic stimulus plan to sustain growth amid the global financial crisis. The central bank has ordered lenders to set aside more deposits as reserves twice this year, and regulators have said they will rein in credit expansion to avert asset bubbles and restrain inflation.
Yen Strengthens
The dollar fell to weakest since December against the yen as traders added to bets the Federal Reserve will keep interest rates near zero to sustain growth in the world’s largest economy.
“The strengthening Japanese yen against the dollar and weakening oil price also put pressure on TOCOM prices,” said Chaiwat. An increase in Japan’s currency cuts the appeal of yen-denominated contracts.
The yen appreciated to as high as 88.14 per dollar and traded at 88.26 at 3:17 p.m. in Singapore.
Crude oil fell to $80.21 a barrel as investors sought safer assets amid concern that Greece won’t receive financial backing from other European nations to ease its economic crisis. The April-delivery contract on the New York Mercantile Exchange was at $80.39 a barrel at 3:19 p.m. in Singapore.
In the cash market, Thai rubber prices advanced on concerns over limited supply during low-production season, the Rubber Research Institute of Thailand said on its Web site today. The auctioned price of unsmoked sheets gained 1.1 percent to 100.29 baht ($3.07) per kilogram. Ribbed smoked sheets added 0.5 percent to 103.59 baht a kilogram, according to the institute.
September-delivery rubber on the Shanghai Futures Exchange lost as much as 2.5 percent to 23,675 yuan ($3,468) a ton, the lowest level since Feb. 11. It settled at 24,075 yuan.
Source: Bloomberg