This entry was posted on Tuesday, January 18th, 2011 at 7:14 pm and is filed under Rubber News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Jan. 18 (Bloomberg) — Rubber dropped from a record on speculation that China may raise interest rates further to curb inflation, potentially reducing demand for the commodity used to make tires.
The June-delivery contract lost as much as 1.7 percent to 450.5 yen per kilogram ($5,452 a metric ton) before settling 1.1 percent lower at 453.4 yen on the Tokyo Commodity Exchange. The price reached an all-time high of 460.4 yen yesterday.
In China, the central bank told lenders Jan. 14 to hold more deposits as reserves for the fourth time in two months. Governments in Asia are tackling accelerating inflation as commodity costs, including food, climb and liquidity rises with an influx of capital from overseas.
“The market was dragged down by caution about Chinese monetary tightening as the nation may act before the Lunar New Year holiday,” Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co., said today. The week-long holiday begins on Feb. 2.
Rubber has advanced 9.4 percent this month, extending last year’s 50 percent rally. Demand has grown on rising car sales led by China and India. Supply may lag behind demand as Thai production, hurt by heavy rain last year, drops further when a low-output period starts next month.
There are “concerns that China may impose measures to cool inflation,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co. The decline in prices may be short-lived amid the supply shortage, Chaiwat said, forecasting a rebound in prices.
Thai Cash Price
The Thai cash price remained at a record 169.30 baht ($5.53) per kilo today, supported by strong demand amid tight supplies, the Rubber Research Institute of Thailand. Lower stockpiles in China also supported the price, according to the institute.
Natural-rubber inventories in China declined 175 tons to 68,675 tons, based on a survey of 10 warehouses, the Shanghai Futures Exchange said on Jan. 14. That’s 55 percent lower than last year’s peak of 151,832 tons.
Rubber production in Thailand during the leaf-shedding season, which runs from the end of February until May, shrinks by 45 percent to 60 percent from peak production, the Association of Natural Rubber Producing Countries has said. The low-production period also occurs at the same time in northern Indonesia and Malaysia, lowering output, the group has said.
The May-delivery contract in Shanghai lost as much as 1.6 percent to 37,655 yuan ($5,716) a ton before closing at 38,125 yuan. The price reached a record 38,920 yuan on Nov. 11.
Source: Bloomberg