Rubber Slumps From 16-Month High After China Restrains Lending

Rubber Slumps From 16-Month High After China Restrains Lending
Jan. 13 (Bloomberg) -- Rubber fell from a 16-month high after China, the world’s top consumer, raised bank-reserve requirements to curb a credit boom and prevent the economy from overheating.
Futures in Tokyo, which earlier reached the highest level since Sept. 12, 2008, fell after the unexpected shift by China’s central bank to curb lending, which may foreshadow higher interest rates and a relaxation in the yuan’s peg to the dollar.
“China’s move had an impact on overall commodities,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. Metals, including copper, zinc and nickel, slumped together with crude oil futures.
Rubber for June delivery lost as much as 9.5 yen to 290.4 yen per kilogram ($3,185 a metric ton) on the Tokyo Commodity Exchange and traded at 293.8 yen at 9:39 a.m. local time. The contract earlier touched 301.2 yen.
Crude oil in New York fell 0.9 percent to $80.04 a barrel, declining for a third day. The price slumped 2.1 percent yesterday, the biggest one-day slump since Dec. 9. A drop in oil prices often erodes the competitiveness of natural rubber against rival synthetic products made from petroleum.
The People’s Bank of China raised the proportion of deposits that banks must set aside as reserves by 50 basis points starting Jan. 18, announcing the decision yesterday after the close of rubber trading in Tokyo. Economists hadn’t anticipated the move until at least April, the median of 11 forecasts in a Bloomberg News survey showed last week.
Rubber for May delivery on the Shanghai Futures Exchange fell 3.3 percent to 25,035 yuan ($3,667) a ton at 9:03 a.m. local time. The contract touched 26,170 yuan on Jan. 11, the highest level since July 2008.
Auto Sales
China supplanted the U.S. as the world’s largest auto market after its 2009 vehicle sales jumped 46 percent, ending more than a century of American dominance, data from the China Association of Automobile Manufacturers showed on Jan. 11.
Sales of passenger cars, buses and trucks in China rose to 13.6 million last year, the fastest pace in at least 10 years, according to the China Association of Automobile Manufacturers. In the U.S., sales slumped 21 percent to 10.4 million, the fewest since 1982, according to Autodata Corp.
China’s vehicle sales have surged since 1999 as economic growth averaging more than 9 percent a year helped automakers including Volkswagen AG compensate for slumping demand in the U.S. and Europe. The market will likely remain the world’s largest, according to Booz & Co., which advises automakers.