Rubber Drops to Lowest in Six Weeks on European Debt Concerns
January 05, 2012, 3:12 AM ESTBy Aya Takada
Jan. 5 (Bloomberg) -- Rubber declined to a six-week low after plans by Italy’s biggest bank to raise more capital stoked concerns that Europe’s debt crisis is worsening, weakening demand for the commodity used in tires.
June-delivery rubber lost as much as 2.6 percent to 258.7 yen a kilogram ($3,372 a metric ton), the lowest level since Nov. 24, before trading at 264.8 yen on the Tokyo Commodity Exchange at 12:35 p.m. Futures plunged 36 percent last year as the debt crisis in Europe threatens global recovery, and natural disasters in Japan and Thailand disrupted vehicle output.
Asian stocks extended a global decline, after UniCredit SpA said it will sell 7.5 billion-euro ($9.8 billion) of shares at a 43 percent discount from its Jan. 3 closing price. Luxembourg Prime Minister Jean-Claude Juncker said the European Union is facing a recession of unknown scope.
“News from Europe rekindled concerns that the region’s debt crisis may be deepening, sapping investor appetite for the futures,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said by phone today.
Rubber was also sold amid concerns that the European crisis is taking a toll on the growth of China, the world’s largest rubber user, as economic slump reduced European demand for Chinese products, he said.
The euro dropped toward an 11-year low against the yen as the share offer from UniCredit boosted concerns the region’s banks will struggle to raise funds.
“Problems sparked by the European debt crisis are reigniting and people in the market have reaffirmed that the situation has not changed,” said Mitsushige Akino, at Ichiyoshi Investment Management Co. in Tokyo.
May-delivery rubber on the Shanghai Futures Exchange gained 3 percent to 24,355 yuan ($3,865) a ton at 11:15 a.m. local time. The Thai cash price was unchanged at 105.95 baht ($3.36) a kilogram yesterday, according to the Rubber Research Institute of Thailand. The price slumped 29 percent last year.
--Editors: Ovais Subhani, Thomas Kutty Abraham
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
