Bloomberg News

Rubber Drops, Paring Weekly Gain, as Data Raise Growth Concern

January 29, 2012

Jan. 27 (Bloomberg) -- Rubber declined, paring a fourth weekly advance, after new homes sales unexpectedly fell in the U.S. and jobless benefit claims increased, raising concerns about the strength of the economic recovery.

The July-delivery contract, which was listed yesterday, settled at 316.4 yen a kilogram ($4,105 a metric ton) on the Tokyo Commodity Exchange. The most-active contract has gained 0.6 percent this week and 20 percent this year.

A U.S. report showed that sales of new homes declined in December for the first time in four months. Claims for U.S. jobless benefits rose last week. The dollar declined against the Japanese currency, cutting the appeal of yen-denominated contracts.

“Rubber was ripe for profit-taking after sharp gains this month,” Ken Kajisa, an analyst at broker ACE Koeki Co. in Tokyo, said by phone today. “It came under pressure as the U.S. data failed to add positive incentives.”

Futures were also sold amid speculation that purchases by China, the world’s largest consumer, may lose steam on high prices and uncertainty about car-sales growth, he said. China’s auto sales slowed last year after the government ended stimulus measures and as the nation’s economic expansion eased.

“Prices may rebound next week as some areas in northern Thailand have entered wintering season and the southern region will follow suit soon,” said Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co.

The Thai cash price remain unchanged at 128 baht ($4.09) a kilogram today, the highest level since Oct. 18, according to the Rubber Research Institute of Thailand. The Shanghai market closed this week for the Lunar New Year holidays.

The government of Thailand, the biggest producer and exporter, approved a plan to buy 200,000 tons of rubber, targeting a local price of 120 baht a kilogram.

Rubber market this year will be driven by a recovery in demand from the automotive sector in China and India, rather than a shortfall in supply, Standard Chartered said today in a research note. The bank initiated coverage of rubber market with a ‘bullish’ outlook and forecast an average price of 350 yen a kilogram this year, it said.

--Editors: Jarrett Banks, Ovais Subhani

To contact the reporter 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: James Poole at jpoole4@bloomberg.net


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