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Rubber in Tokyo slumped from a 30- year high while futures in Shanghai tumbled from a record amid concern that China, the largest user, may take additional steps to curb inflation. The cash price in Thailand remained at a record on supply concerns.
April-delivery rubber on the Tokyo Commodity Exchange declined as much as 5.7 percent to 357.5 yen per kilogram ($4,343 a metric ton) before settling at 360 yen. That is the biggest decline in six months, paring this month’s advance to 10 percent. The May-delivery contract in Shanghai fell by the daily limit to 35,790 yuan ($5,397) a ton.
Commodities declined on speculation that China’s government may step up measures to contain growth in housing and consumer prices after inflation accelerated to a two-year high last month. Inflation quickened to 4.4 percent in October from 3.6 percent in September, the statistics bureau said yesterday.
“China may raise interest rates to curb inflation, which could slow economic growth and raw-material demand,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said today by phone. Rubber futures also tumbled as “historically high prices may be weakening demand,” he added.
‘Tight Fundamentals’
Rubber futures in Tokyo have gained 30 percent this year as producers have had difficulty catching up with growing demand because of rain and flooding that disrupted latex output in Southeast Asian countries.
“Considering tight fundamentals, an upward trend in rubber will remain intact in the medium term,” Shigemoto said.
The cash price in Thailand, the largest producer and exporter, remained at a record 132 baht ($4.43) per kilogram as heavy rainfall affected supply, according to the Rubber Research Institute of Thailand.
Recent floods and storms in Thailand are expected to damage 540,814 rai (213,821 acres) of rubber plantation land, government spokesman Watchara Kannikar said Nov. 9. That is equivalent to 4.5 percent of the country’s tappable area of 12 million rai, according to Bloomberg calculations.
Natural-rubber output in Thailand may decline by 10 percent to 870,000 tons in the fourth quarter, reducing total production this year by 5 percent to 3 million tons, according to an estimate by the Thai Rubber Association. Annual supply may fall by 50,000 tons over the next seven years until new trees mature and produce latex, association President Luckchai Kittipol said.
Prices may surge above 150 baht by the end of this year as demand remains robust while supply is limited, according to Supachai Phosu, deputy minister of agriculture and cooperatives.
Natural-rubber imports by India, the fourth-biggest producer, may climb at least 18 percent this year as excess rain lowers output and tire demand increases in Asia’s second- fastest-growing market for cars.
Purchases in the year to March 31 may exceed 200,000 tons, from 170,048 tons a year earlier, Rajiv Budhraja, director general of the Automotive Tyre Manufacturers’ Association, a producers’ group, said in an interview yesterday.
Source: Bloomberg