Bloomberg News

Rubber Futures Pare Weekly Loss on Greek Bailout Optimism, Oil

November 04, 2011

Nov. 4 (Bloomberg) -- Rubber gained for the first time in four days, paring a weekly loss, as oil climbed and after Greece reduced the risk of a disorderly default by abandoning a referendum on a bailout plan.

April-delivery rubber gained as much as 1.7 percent to 298 yen a kilogram ($3,818 a metric ton) before settling at 293.5 yen on the Tokyo Commodity Exchange. The market was closed yesterday. The most-active contract fell 5.1 percent this week after surging 9.6 percent the previous week.

Oil rose a third day to trade near the highest in three months in New York after Greece decided not to hold a public vote on a bailout package, Finance Minister Evangelos Venizelos told lawmakers in Athens yesterday.

“Signs that European problems may be contained helped spur buying of riskier assets, erasing earlier losses of rubber futures,” Sureerat Kunthongjun, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. Any upside is limited due to concerns over the impact of flooding in Thailand, the world’s largest rubber producer, she said.

The floods are resulting in the biggest supply disruptions in the automobile industry since the March 11 earthquake and tsunami in Japan. Floods spread across 64 of Thailand’s 77 provinces and swamped seven industrial estates where Honda Motor Co. and auto-parts makers have factories. Twenty five provinces remain inundated, the government said.

“Demand in the country and overseas has slowed after Japanese carmakers cut production,” said Chaiwat Muenmee, analyst at Bangkok-based commodity broker DS Futures Co. “We don’t know how long the floods will last. This is negative factor to the rubber markets.”

Worldwide Disruption

Toyota Motor Corp., Asia’s biggest carmaker, will scale back production in Japan for a third week and suspend overtime in North America for a second week as disruptions from the flooding spread worldwide. Japanese factories’ reduced hours, which began Oct. 24, will be extended until at least Nov. 12, the Toyota City, Japan-based carmaker said on its website.

Honda Motor plans to reduce production in Brazil, England and the Philippines because of parts shortages, said Keitaro Yamamoto, a spokesman for the company.

In Shanghai, January-delivery rubber jumped 6.2 percent to close at 27,410 yuan ($4,319) a ton after falling 4.3 percent yesterday. In a cash market, the benchmark Thai price declined for a fourth day, falling 0.4 percent to 116.15 baht ($3.79) a kilogram today, according to the Rubber Research Institute of Thailand.

--Editors: Jarrett Banks, Richard Dobson

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

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


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