BLBG:Rubber Falls, Set For Biggest Monthly Drop In 8 On Europe Crisis
Rubber declined, poised for the worst monthly loss in eight, amid concern that Europe’s debt crisis may be worsening, sapping demand for the commodity used in tires.
The November-delivery contract dropped to as low as 265.5 yen a kilogram ($3,339 a metric ton) before trading at 267.2 yen on the Tokyo Commodity Exchange at 11:22 a.m. The most-active contract has lost 15 percent this month, the largest drop since September. It pared this year’s advance to 1.4 percent.
Concerns grew that Spanish lenders will need more financial support to weather Europe’s debt crisis as Prime Minister Mariano Rajoy struggles to avoid tapping markets to fund a bailout of its third-biggest lender. The European turmoil added to the deceleration of economic expansion in China, the world’s largest rubber consumer, as the region is China’s largest export market, said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo.
“The market was dragged down by concerns that the European crisis may deepen,” Shigemoto said today by phone. “Investor demand for the commodity is weakening.”
Futures were also sold as Thailand, the world’s largest exporter, did not take physical delivery at the expiry of the spot contract this month, easing speculation that the nation may take additional steps to support prices, Shigemoto said.
Thai rubber exporters will continue buying on overseas bourses until local prices climb to 120 baht ($3.79) a kilogram, the level the government would like to see, Prapas Euanontat, the president of the Thai Rubber Association, said May 24.
Thailand announced plans this month to buy more than 10,000 tons in Tokyo and Shanghai and to continue purchases from local farmers at above-market rates to drive prices higher. The country will work with Indonesia and Malaysia to tackle the slump, according to deputy farm minister Nattawut Saikuar. The three nations represent about 70 percent of global supply.
Thai rubber on a free-on-board basis was unchanged at 116.05 baht a kilogram yesterday, according to the Rubber Institute of Thailand. The September-delivery contract on the Shanghai Futures Exchange lost 0.8 percent to 24,280 yuan ($3,825) a ton.
To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net
To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net
