Rubber Declines on Demand Concerns Following Japan’s Earthquake Crisis

Rubber Declines on Demand Concerns Following Japan’s Earthquake Crisis
TUESDAY, APRIL 26, 2011

Rubber declined amid concern that a disruption in car production caused by Japan’s record earthquake will continue, curbing demand for the commodity.
The September-delivery contract lost as much as 3.4 percent to 404.9 yen per kilogram ($4,930 per ton) on Monday (Apr 25), extending last week’s 3.7 percent slump, before settling at 405.2 yen on the Tokyo Commodity Exchange.
Toyota Motor expects production for all models to return to normal by November or December, as the world’s biggest carmaker struggles with supply-chain disruptions caused by Japan’s largest earthquake and tsunami on record.
Top tire maker Bridgestone plans to suspend production lines and limit operating hours at factories serviced by Tokyo Electric Power to save electricity during Japan’s summer.
“The auto industry is having difficulty recovering from damage caused by the quake, raising speculation that negative influences on rubber demand may be prolonged,” said Kazuhiko Saito, an analyst at broker Fujitomi.
Toyota will begin raising production to regular levels from July in Japan and from August at overseas plants, the carmaker said in a statement on Friday (Apr 22).
The company may lose production of 300,000 vehicles in Japan and 100,000 units overseas through the end of April because of quake-related shutdowns, executive vice president Atsushi Niimi said on Friday (Apr 22).
He added that Toyota was unlikely to meet its full-year global output target of 7.7 million units.
October-delivery rubber, which was listed on the Tokyo Commodity Exchange on Monday (Apr 25), settled at 395.9 yen after opening at 413 yen.
Rubber was also sold amid concern that China, the world’s largest consumer of the raw material, may increase interest rates further to curb inflation, capping demand, Saito said.
China’s consumer prices may rise between 5.2 percent and 5.5 percent in April, according to China International Capital.
“China demand continues to slow and its low level of stockpiles showed that the country used its own reserves rather than buying raw materials in the market,” said Chaiwat Muenmee, an analyst at commodity broker DS Futures.
China’s natural-rubber inventories reportedly fell for an 11th straight week, losing 1,222 tons to an eight-year low of 14,717 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said on Friday (Apr 22).
The physical price of Thai rubber dropped 1.4 percent to 174.55 baht ($5.83) per kilogram on Monday (Apr 25), according to the Rubber Research Institute of Thailand.
Farmers in Thailand, Indonesia and Malaysia reduce tapping during the so-called wintering season from February to May, when trees shed leaves and latex production drops, according to the Association of Natural Rubber Producing Countries.
(Jakarta Globe, April 25, 2011)




Tokyo rubber futures fall
TUESDAY, APRIL 26, 2011

Tokyo (april 26, 2011) : key tokyo rubber futures fell 4 percent on monday on weakness in shanghai rubber futures and concern over softening demand from the japanese auto sector. the benchmark tocom rubber futures for october delivery, which debuted on monday, fell as low as 395.4 yen per kg, down 4.3 percent from its opening price, before settling at 395.9 yen, down 17.1 yen from the open.
the previous benchmark for september delivery settled down 13.8 yen at 405.2 yen per kg. the most active rubbercontract on the shanghai commodity exchange for september delivery fell 1,510 yuan ($232.057) per tonne to close at 33,270 yuan per tonne on monday.
"tocom futures slid as chinese rubber futures and stocks fell on concerns about the impact on economic growth from monetary tightening," said kazuhiko saito, chief commodities analyst at fujitomi co. he said a fall in the september delivery contract below 400 yen could pave the way for a technically weak market, as sentiment was also weighed by cuts in japanese automakers' car production following the march 11 earthquake and subsequent tsunami that severely disrupted the supply chain.
honda motor co said on monday that its production in japan would return to normal levels within this year, adding that its domestic output until the end of june would be at 50 percent of its original plans. that followed toyota motor corp, the world's biggest automaker, saying on friday that it could take until the end of 2011 before output has fully recovered to levels before the earthquake. until then, toyota's domestic factories will continue to work at volumes equivalent to half of original plans and at an average 40 percent outside japan.
toyota on monday said its vehicle production in japan fell 62.7 percent from a year earlier while its global output fell 29.9 percent year-on-year. "toyota's production plans hurt sentiment on concern that demand from the automobile sector will remain weak until the end of the year," saito said. "an expected end to japan's cap on highway tolls later this year also led to speculation that demand for tyres will drop."
"supply will also increase as producer countries are entering tapping season. buying factors are hard to find under these circumstances," saito said. farmers in thailand and malaysia, the biggest and third-biggest producers, have resumed tapping, but supplies were unlikely to rise sharply as farmers need a couple of weeks to collect latex and manufacture them into standard export-grade rubber sheets.