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Oct. 21 (Bloomberg) — Rubber declined for a second day as data showed China’s economy expanded in the third quarter at the slowest pace in a year, raising concern demand may weaken from the largest user.
The most-active contract on the Tokyo Commodity Exchange fell as much as 1 percent to 332 yen per kilogram ($4,092 a metric ton), before settling at 334.5 yen. Prices climbed to 340.8 yen, near a 27-month high in intraday trade amid concern floods in Southeast Asia may be hurting output.
China’s economy grew 9.6 percent in the third quarter, the smallest gain in a year, as inflation accelerated in September to the fastest pace in 23 months. Industrial output climbed 13.3 percent in September from a year ago, the statistics bureau said. That compares with a 13.9 percent gain in August and the median 14 percent estimate in a Bloomberg survey of 23 economists.
“People who had taken long positions on expectations for bullish Chinese data were liquidating them,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today. “The figures, especially industrial output, were not as strong as they had expected.”
March-delivery rubber in Shanghai declined as much as 3.5 percent to 30,665 yuan ($4,614) a ton before closing at 31,170 yuan. It reached a record 33,000 yuan on Oct. 19.
Losses in rubber futures were limited by concern that wet weather in Asian producing countries may limit supplies, Saito said. Central, northern and northeastern provinces in Thailand, the world’s largest producer, were affected by floods and rainfalls spread across the country, the government said.
Flood Damage
Heavy rains and flash floods inundated 24 provinces since the beginning of October, damaging 1.7 million rai (0.7 million acres) of farmland, according to Farm Minister Theera Wongsamut. After the waters recede, the ministry will assess the damage, he said in a statement. Floods, which have killed 11 people since Oct. 10, remain in four provinces, the Department of Disaster Prevention and Mitigation said yesterday.
A severe drought in Yunnan at the beginning of this year and torrential rains this month in Hainan, the top two producing areas in China, will reduce domestic rubber output, according to Guo Cheng, an analyst at Yongan Futures Co.
In the cash market, the benchmark Thai price was little changed at 120.05 baht ($4.02) per kilogram, according to the Rubber Research Institute of Thailand. Demand from buyers in China to rebuild stockpiles and falling output in producing countries will support prices, the group said.
Asset-Price Bubble
China’s central bank Oct. 19 raised the benchmark one-year lending rate to 5.56 percent from 5.31 percent and the deposit rate to 2.5 percent from 2.25 percent as policy makers attempt to curb lending and prevent an asset-price bubble.
Chinese policy makers have grappled this year with rising consumer prices and record property-price gains after record lending and a 4-trillion yuan stimulus package pumped up growth during the financial crisis. Consumer prices rose 3.6 percent last month, the statistics bureau said today.
Natural-rubber imports by China jumped 19 percent from a month earlier to 190,000 tons in September as the country’s passenger-car sales to dealerships quickened from August on additional incentives for buyers.
Wholesale deliveries of passenger cars rose 19.3 percent to 1.21 million, accelerating from 18.7 percent in August, the China Association of Automobile Manufacturers said Oct. 12.
Source: Bloomberg