Bloomberg News

Rubber Drops to 13-Month Low as Europe Crisis May Stall Recovery

September 29, 2011

Sept. 29 (Bloomberg) -- Rubber tumbled to a 13-month low, heading for the worst quarterly loss since 2008, as concern grew that Europe’s debt crisis may deepen, sending global economies into a recession and damping raw-material demand.

March-delivery rubber plunged as much as 6.5 percent to 289.5 yen a kilogram ($3,783 a metric ton), the lowest level since Aug. 24, before settling at 301.5 yen on the Tokyo Commodity Exchange. The most-active contract has lost 17 percent this quarter, set for the worst performance since the three months ended Dec. 31, 2008.

Asian stocks extended a global sell-off amid concern that divisions among European leaders will hamper efforts to solve the region’s debt crisis. Japan’s currency climbed against most of its peers as demand for a haven increased, cutting the appeal of yen-based futures.

“The market is vulnerable to selling amid concern the European crisis will drag global economies into recession,” Ken Kajisa, an analyst at broker ACE Koeki Co., said today by phone.

Fifty-nine percent of respondents to a quarterly Bloomberg Global Poll of investors, analysts and traders said China’s gross domestic product, which rose 9.5 percent last quarter, will gain less than 5 percent annually by 2016. Twelve percent see such a slowdown within a year, and 47 percent said it will occur in two to five years, the poll showed.

The European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, an official said on condition of anonymity because the deliberations are private.

‘Ups And Downs’

“It’s all about Europe,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “The focus is if they can establish a unity, and the market’s going through ups and downs according to developments.”

In Shanghai, January-delivery rubber lost as much as 5.6 percent to 26,010 yuan ($4,066) a ton before closing at 26,635 yuan.

The cash price of Thai rubber dropped 1.1 percent 131.10 baht ($4.20) a kilogram today, the Rubber Research Institute of Thailand said on its website. The southwest monsoon remains strong, causing widespread rainfall in southern Thailand and disrupting tapping, according to the group.

--With assistance from Supunnabul Suwannakij in Bangkok. Editor: Jarrett Banks

To contact the reporters on this story: Aya Takada at atakada2@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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