BLBG: Rubber Drops as European Debt Concerns Trigger Industrial Commodity Sales
Rubber dropped from a five-month high as concern grew that European government finances may be worsening, leading to sales of industrial commodities.
The most-active contract dropped 0.4 percent to 307.9 yen per kilogram before trading at 308.7 yen on the Tokyo Commodity Exchange at 11:21 a.m. The contract touched 312.8 yen per kilo ($3,716 a metric ton) yesterday, the highest since April 28.
Asian stocks declined today as yield spreads showed perceptions of Ireland and Portugal’s creditworthiness are deteriorating. Oil and base metals also dropped.
“Rubber tracked losses in equities and other industrial commodities,” Takaki Shigemoto, an analyst at JSC Corp. in Tokyo, said by phone. “Risk aversion by investors increased amid renewed concern over the European debt issue.”
The MSCI Asia Pacific Index lost 0.3 percent to 126.69. The extra yield investors demanded to buy Irish 10-year bonds instead of Germany’s bunds widened to a record yesterday. Anglo Irish Bank Corp.’s senior debt was cut to the lowest investment grade by Moody’s Investors Service.
“Concerns about the global economic outlook haven’t cleared,” said Yasushi Noguchi, a strategist at SMBC Friend Securities Co. in Tokyo. “There are still issues related to Europe’s debt.”
Losses in rubber futures were limited as cash prices increased amid expectations that supplies may remain tight, said JSC’s Shigemoto.
Largest Exporter
Shippers in Thailand, the world’s largest exporter, offered so-called RSS-3 grade rubber for November at $3.59 a kilogram, up from $3.52 at the end of last week, he said.
“Demand from tire makers was strong, while supply was curbed by wet weather,” Shigemoto said.
Natural-rubber supply will be curbed next year as yields from aging trees decline and output growth slows, according to the Association of Natural Rubber Producing Countries. Thailand, Indonesia and Malaysia are the three biggest producers.
“While supply remains tight throughout this year, the possibility of change is remote in 2011,” Jom Jacob, the group’s senior economist, said in a statement earlier this month. The market remains “bullish” as rains disrupt supply from Thailand and Indonesia, the group said.
The March-delivery contract on the Shanghai Futures Exchange declined 25 yuan to 26,725 yuan ($3,995) a ton at 10:46 a.m. local time.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
