BLBG: Rubber Declines From Two-Week High on Yen Rally, Slump in Oil
By Aya Takada
Dec. 18 (Bloomberg) -- Natural rubber declined from a two- week high as falling oil cut the cost of making rival synthetic product and a rally in Japan’s currency against the dollar reduced the appeal of yen-based futures.
Prices in Tokyo lost as much as 6 percent as crude oil fell to the lowest in more than four years on skepticism a production cut by OPEC will be enough to boost prices. The dollar fell to a 13-year low against the yen yesterday after the Federal Reserve cut its target rate to as low as zero and pledged to buy unlimited quantities of securities.
“Currency and oil were the largest factors that spurred selling of rubber futures,” Takaki Shigemoto, analyst at Tokyo- based commodity broker Okachi & Co., said by phone today.
Rubber for May delivery, the most-active contract, lost 3.5 percent to 117.8 yen a kilogram ($1,342 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.
Rubber futures reached a six-year low of 99.8 yen Dec. 5, plunging 72 percent from the 28-year high of 356.9 yen June 30, as the global recession cut auto sales and forced carmakers to reduce output, leading to a drop in tire demand.
Nissan Motor Co., Japan’s third-largest automaker, will reduce domestic production by 78,000 vehicles starting in January to reduce inventory, the company said yesterday. Honda Motor Co., the second-largest maker, also said it will cut global production by 314,000 vehicles the current fiscal year.
Tire demand in Japan is forecast to fall 5.9 percent from a year earlier to 121,920 tires in 2009, according to the Japan Automobile Tyre Manufacturers Association.
Thai Prime Minister Abhisit Vejjajiva said in an interview yesterday, before taking office, that the government will provide budget funds to help store rubber output and the measure will reduce pressures on prices later this year and early next year. Abhisit won a parliamentary vote Dec. 15 amid tumbling commodity prices, sagging exports and political unrest.
The plan to hold back exports adds to pending cuts in outputs by private players in Thailand, Indonesia and Malaysia, whose production account for 70 percent of global supply.
The three countries agreed in October to jointly pare output by 215,000 tons mainly by replanting trees. They further decided to reduce exports by a combined 700,000 tons next year, Nurmala Abdul Rahim, Malaysia’s deputy secretary general at the Ministry of Plantation Industries and Commodities, said Dec. 13.
March-delivery rubber on the Shanghai Futures Exchange, the most-active contract, fell 0.9 percent to 10,030 yuan ($1,468) a ton at 11:17 a.m. local time.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net; To contact the reporter on this story:
