Rubber Posts Biggest Weekly Drop Since Dec. 11 as Stocks Slump Share Business

Rubber Posts Biggest Weekly Drop Since Dec. 11 as Stocks Slump Share Business
Jan. 29 (Bloomberg) -- Rubber dropped for a sixth day and posted the biggest weekly decline since Dec. 11 on speculation that the global economic recovery may falter and as shares fell.

Futures in Tokyo fell 5.2 percent this week and the price lost 0.6 percent this month, the first drop in four months. Asia stocks declined, with the regional benchmark posting its biggest weekly loss since February, on concern about Greece’s swelling deficit, U.S. unemployment and tightening measures by central banks in America, China and India.

“There were no aggressive buyers as concerns linger about the U.S. economic outlook and China’s monetary tightening,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Declining stocks in Asia and the U.S. dragged market sentiment lower.”

Rubber for July delivery fell 0.2 percent to close at 274.3 yen per kilogram ($3,047 a metric ton) on the Tokyo Commodity Exchange after gaining earlier as much as 3.2 percent.

May-delivery rubber on the Shanghai Futures Exchange added 0.2 percent to settle at 23,195 yuan ($3,397) a ton. Prices slumped yesterday to 22,760 yuan, the lowest level intraday level since Dec. 23.

The MSCI Asia Pacific Index slumped 1.8 percent to 116.96 at 4:07 p.m. in Tokyo, set for a 4.4 percent drop for the week. Standard & Poor’s 500 futures slipped 0.5 percent.

‘Getting Wary’

“People are getting wary about the outlook for the U.S. economy,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Central banks globally have little room to further loosen policies. We can’t expect excess liquidity to continue to flow into markets.”

China is expected to raise the deposit reserve requirement ratio for banks after the Lunar New Year holiday to curb surging liquidity, the Shanghai Securities News reported today, citing unidentified people. The vacation starts on Feb. 14 and lasts for a week.

In the cash market, shippers in Thailand, the world’s largest exporter, offered so-called RSS-3 grade rubber for March shipment at $3.10 per kilogram today, little changed from yesterday, Saito said. Offers were $3.16 on Jan. 25.

“Shippers were reluctant to cut prices substantially, despite a sell-off in the futures markets, after rain reduced the raw-material supply last month,” he said.