Rubber Posts Worst Loss in 4 Weeks as Chinese Demand May Slow

Rubber Posts Worst Loss in 4 Weeks as Chinese Demand May Slow
By Aya Takada
Sept. 18 (Bloomberg) -- Rubber dropped for the first time in four days, booking the worst loss in four weeks, amid concern that demand in China may slow after the U.S. imposed tariffs on tire imports from the Asian country.
Futures in Tokyo lost as much as 2.4 percent, reversing a 5.8 percent advance in the previous three days. About 30 tire makers may either have to cut production or suspend output completely because they can’t export to the U.S., according to the China Rubber Industry Association yesterday. The U.S. imposed tariffs of 35 percent on tires from China in response to a so-called safeguard petition filed to protect U.S. producers.
“The market was capped by concern the U.S. action may have a negative impact on consumption,” Hisaaki Tasaka, analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone.
February-delivery rubber fell 1.8 percent to settle at 203.1 yen a kilogram ($2,230 a metric ton) on the Tokyo Commodity Exchange. Prices dropped 5.6 percent this week, the largest loss since the week ended Aug. 21.
Futures also declined as investors reduced holdings before the Tokyo exchange closes from Sept. 21 to Sept. 23 for public holidays, Tasaka said.
Rubber gained 49 percent this year as surging car sales in China, the world’s largest consumer, spurred investor buying. China’s passenger-car sales rose a record 90 percent last month, according to the China Association of Automobile Manufacturers. A 4 trillion yuan ($586 billion) stimulus plan has shielded the country from the global recession, helping car sales jump at least 45 percent for four months in a row.
Stockpiles Rising
January-delivery rubber on the Shanghai Futures Exchange lost 1.3 percent to close at 17,285 yuan ($2,537) a ton.
Prices in Shanghai dropped on speculation stockpiles may keep rising after reaching the highest level since March 2008 last week, Tasaka said. Rubber inventories monitored by the exchange increased 5,755 tons to 91,551 tons, the bourse said Sept. 11, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.