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April 13 (Bloomberg) — Rubber dropped from a 20-month high as a stronger Japanese currency pared the appeal of yen- based contracts, and a drop in crude oil prices reduced the cost of making rival synthetic products used in tires.
Futures in Tokyo lost as much as 1.5 percent after reaching 332.3 yen per kilogram ($3,579 a metric ton), the highest level since July 31, 2008.
The yen advanced on speculation demand for Greece’s short- term debt will be weak at an auction today, and as losses in Asian stocks sapped demand for riskier investments. Oil declined for a fifth day amid forecasts of an 11th straight weekly gain in U.S. crude supplies, signaling fuel demand of the largest consumer may be slow to recover.
“The market lost support from the currency and energy markets,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Underlying sentiment remains positive on tight supply from Thailand.”
Rubber for September delivery lost as much as 4.9 yen to 324.2 yen before settling at 328 yen on the Tokyo Commodity Exchange. The price fell for the first time in three days.
Futures have advanced 19 percent this year as global economies recovered from the worst postwar recession, boosting demand for the commodity used in tires. A seasonal decrease in output in Thailand, the world’s largest producer, also increased prices, Saito at Fujitomi said.
Thailand is in a low production period from February to April, known as wintering, when rubber trees shed their leaves and latex output slows. Rubber exports tend to decrease until the middle of the year, Saito said.
Political Turmoil
Clashes between Thai security forces and anti-government protesters also stoked speculation that the political turmoil may disrupt supplies from the country, he said. The violence killed as many as 21 people, including a Japanese journalist, ahead of a three-day holiday in Thailand starting today.
Passenger car sales in China, the world’s largest rubber consumer, surged 63 percent in March as government stimulus policies helped boost demand in the biggest vehicle market.
Sales of cars, multi-purpose vehicles and sport-utility vehicles rose to 1.26 million units last month, China Association of Automobile Manufacturers said on April 9. First- quarter sales jumped 76 percent to 3.52 million units, according to the association.
September-delivery rubber on the Shanghai Futures Exchange lost 0.9 percent to 25,355 yuan ($3,714) a ton at 2:32 p.m. local time.
“The market was curbed by speculation China may allow its currency to climb against the dollar,” Saito said.
China may allow the yuan to appreciate by June 30 to curb inflation while avoiding a one-time jump in value that might endanger export jobs, a survey of analysts showed.
Twelve of 19 respondents surveyed by Bloomberg said the central bank will allow the currency to float more freely this quarter, five expect it to happen by Sept. 30, and the rest see the move by year-end. Eleven rule out a one-off revaluation, including state-owned Bank of China Ltd. and China Construction Bank Corp.
Source: Bloomberg