Rubber retreated for the first time in three days as a strengthening Japanese currency reduced the appeal of the commodity used to make tires.

The most-active contract in Tokyo lost as much as 1.1 percent after gaining 0.8 percent in the past two sessions. The yen gained versus 15 of its 16 major counterparts as concern over the health of European banks and the pace of the U.S. economic recovery boosted demand for the currency as a refuge.

The decline was limited because of optimism that demand may grow, as stockpiles in Japan and China are at low levels, said Avtar Sandu, Asian Commodities Manager at Phillip Futures Pte.

Natural-rubber stockpiles monitored by the Tokyo exchange dropped by 29 percent to 1,341 metric tons as of July 10, data from the bourse showed yesterday. It was the lowest volume since at least 2001, said exchange spokesman Seiki Ichimura. Data before that year were unavailable, he said.

December-delivery rubber fell as much as 2.8 yen to 261.7 yen per kilogram ($3,002 a ton) before settling at 263.5 yen on the Tokyo Commodity Exchange. July-delivery rubber gained 2.2 percent to 352 yen, after declining 3 percent yesterday.

“Investors are optimistic Chinese and Japanese buyers will soon build up their depleting stockpiles,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

“Rainfall in southern Thailand may limit supply availability, providing support to rubber prices,” said Chaiwat. Limited supply and a low level of stockpiles may make physical delivery difficult at the expiry of the July contract.

Natural-rubber inventories in China have slumped 64 percent this year to 21,374 tons, according to Bloomberg data.

November-delivery rubber on the Shanghai Futures Exchange was little changed at 21,720 yuan ($3,204) a ton.

The cash price was quoted at 104.65 baht a kilogram, unchanged from yesterday, the Rubber Research Institute of Thailand said on its website.

Source: Bloomberg

Comments are closed.