Rubber Snaps Five-Day Decline as Lower Prices May Lure Buyers

Rubber Snaps Five-Day Decline as Lower Prices May Lure Buyers
Jan. 29 (Bloomberg) -- Rubber gained for the first time in six days amid speculation lower prices may attract buying from China, the world’s largest consumer.
Futures in Tokyo recovered after reaching a one-month low yesterday. Rubber slumped 9.2 percent in the previous five days, heading for the worst monthly performance since September amid concern that the global economic recovery may falter as China may take more steps to slow growth.
China is expected to raise the deposit reserve requirement ratio for banks after the Lunar New Year holidays to curb surging liquidity, the Shanghai Securities News reported today, citing unidentified people. Japanese stocks fell, sending the Topix index toward its biggest weekly slump in almost four months after more Americans than estimated filed claims for unemployment benefits.
“Rubber was supported by speculation that China may add to stockpiles after the price drop and before the New Year holidays next month,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “There were no aggressive buyers as concerns linger about the U.S. economic outlook and China’s monetary tightening.”
Rubber for July delivery gained 1 percent to 277.6 yen per kilogram ($3,086 a metric ton) on the Tokyo Commodity Exchange at 11:32 a.m. local time. Prices have added 0.5 percent this month after more than doubling last year on optimism that the global economic recovery will boost demand for the commodity used in tires.
‘Getting Wary’
May-delivery rubber on the Shanghai Futures Exchange added 0.6 percent to 23,310 yuan ($3,414) a ton at 10:35 a.m. local time. Prices slumped yesterday to 22,760 yuan, the lowest level intra-day level since Dec. 23.
The Standard & Poor’s 500 Index fell 1.2 percent in New York yesterday after a Labor Department report showed initial jobless applications decreased less than economists had estimated in the week ended Jan. 23. The Nikkei 225 Stock Average fell 1.5 percent to 10,258.96 at 10:54 a.m. in Tokyo.
“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.”
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.