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Rubber declined, paring a monthly gain, as futures in Shanghai slumped amid concern that China may tighten trading rules to curb excessive speculation and data showed Japan’s industrial production dropped at a faster pace.
The most-active contract lost as much as 1.5 percent to 331.6 yen per kilogram ($4,122 a metric ton) before trading at 332.4 yen on the Tokyo Commodity Exchange at 11:19 a.m. Futures have gained 6.5 percent this month, heading for the best performance since August, and increased 20 percent this year.
Futures in Shanghai tumbled amid speculation that China may take additional steps to curb raw materials prices. The Zhengzhou Commodity Exchange increased the margin requirement for rice, rapeseed oil, wheat and sugar trading on Oct. 26. The action came after the bourse said it would track “abnormal” trading and recommend investigation by watchdogs.
“Caution about Chinese regulation was the largest drag on the price of rubber futures,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said today by phone.
Chinese policy makers have grappled with rising consumer prices and 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.
May-delivery rubber on the Shanghai Futures Exchange slumped as much as 4.8 percent to 30,765 yuan ($4,607) a ton before trading at 31,265 yuan at 10:15 a.m. local time. The price climbed to a record 33,320 yuan on Oct. 26.
Japan’s Factories
Rubber futures also declined as data showed Japan’s industrial production fell for a fourth month in September, raising concern its demand for the commodity used in tires may weaken, Shigemoto said.
Factory output decreased 1.9 percent from August, when it dropped 0.5 percent, the Trade Ministry said in Tokyo today. The median estimate of 27 economists surveyed by Bloomberg News was for a 0.6 percent decline.
Manufacturers including Toyota Motor Corp. and Honda Motor Co. are grappling with the appreciation of the yen, which has gained more than 5 percent even after the government intervened in the foreign-exchange market last month. Japan’s exports grew at the slowest pace this year in September as global demand cooled, a government report showed this week.
Losses were limited as rain may cause flash floods and landslides in 15 southern provinces in Thailand before the end of the month, the Department of Disaster Prevention and Mitigation said. About 68 percent of rubber plantation areas are in the south of Thailand, the largest producer and exporter.
A natural-rubber supply shortage will likely “worsen” in the fourth quarter as unseasonal rainfall continues to disrupt production from key growers, the Association of Natural Rubber Producing Countries said.
Global rubber production this year is unlikely to increase more than 5.3 percent to 9.4 million tons, from a previous forecast of 6.3 percent, the association said. A further cut in output is expected because of tapping disruptions in Malaysia, Thailand and India, the group said.
Source: Bloomberg