Rubber Declines for Second Day as Oil’s Retreat Reduces Demand

Rubber Declines for Second Day as Oil’s Retreat Reduces Demand
Oct. 27 (Bloomberg) -- Rubber declined for a second day after crude oil slumped the most in a month, reducing investor interest in the commodity as an alternative to synthetic products made from petroleum for use in tires.
Futures in Tokyo fell as much as 1.3 percent to 227.7 yen ($2,473 a metric ton), retreating further from a one-year high of 235.7 yen reached Oct. 23. Oil slipped yesterday as U.S. equities slumped on concern the government will phase out a tax credit for homebuyers, and as OPEC may raise production targets when it meets in December after the International Energy Agency warned that rising prices threaten the global economic recovery.
“Rubber was sold in tandem with oil and other commodities as slump in global stocks reduced risk appetite of investors,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd., said today by telephone.
March-delivery rubber declined 0.8 percent to 229.0 yen a kilogram on the Tokyo Commodity Exchange at 10:26 a.m. local time. April-delivery rubber, listed on the exchange today, traded at 230.9 yen after opening at 228.8 yen.
Futures often move in the same direction as crude oil as competing synthetic rubber is made from naphtha, distilled from petroleum. December-delivery oil dropped 2.3 percent percent to close at $78.68 a barrel in New York yesterday, the most since Sept. 24 and the lowest settlement since Oct. 16. It traded at $78.8 as of 10:35 a.m. Tokyo time.
Losses in rubber futures were limited as Japan’s currency fell to the lowest level in a month against the dollar, raising the appeal of yen-denominated contracts, Sugata said.
S&P 500 Index
The U.S. currency strengthened against the euro and the yen on concern U.S. bank losses will derail the global economic recovery, sapping demand for higher-yielding assets. The Standard & Poor’s 500 Index slid 1.2 percent in New York yesterday, led by bank shares after analyst Dick Bove downgraded Fifth Third Bancorp, SunTrust Banks Inc. and U.S. Bancorp on concern loan losses will remain high.
January-delivery rubber on the Shanghai Futures Exchange lost 0.8 percent to 19,015 yuan ($2,785) a ton at 9:37 a.m. local time.
Rubber inventories increased 5,526 tons to 110,683 tons, the Shanghai Futures Exchange said on Oct. 23. The volume was the largest level since November, 2004.