Rubber Declines on Concern China Tightening May Curb Demand Share Business

Rubber Declines on Concern China Tightening May Curb Demand Share Business

Feb. 15 (Bloomberg) -- Rubber fell the first time in four days on concern that China’s attempt to cool its economic expansion may curb demand for the commodity used in tires.

Futures in Tokyo fell as much as 1.1 percent to 282 yen per kilogram ($3,127 a metric ton) after the price advanced 6.4 percent last week. U.S. stocks and commodities fell Friday after China unexpectedly increased bank reserve requirements for lenders, prompting speculation efforts to curb growth there will dent demand for commodities.

“Investors are worried that the China tightening would lower demand for tires and may affect the pace of global economic recovery,” Chaiwat Muenmee, analyst at DS Futures Co. Ltd., said by phone from Bangkok.

Rubber for July delivery declined as much as 3.2 yen, the largest intra-day fall since Feb. 5. The contract traded at 283.3 yen at 10:58 a.m. Singapore time.

The People’s Bank of China said on its Web site Feb. 12 that the reserve requirement for banks will increase 50 basis points effective Feb. 25. China’s policy makers are aiming to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive a recovery from the first global recession since World War II.

Oil traded near $74 a barrel after declining Friday as China ordered banks to set aside more deposits as reserves for the second time in a month.

“Some players are cashing in for profit amid thin trading as markets close for Chinese New Year,” Rewat Yenchai, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok.

The Shanghai Futures Exchange is closed this week for the Lunar New Year holidays.