Rubber Plunges to a Four-Month Low on Greek Impasse

Rubber Plunges to a Four-Month Low on Greek Impasse
May 15, 2012


Rubber plunged to a four-month low as the political impasse in Greece raised speculation the nation may leave the euro, deepening an economic slump in the region and weakening demand for the commodity used in tires.

October-delivery rubber slumped as much as 5.1 percent to 265 yen a kilogram ($3,317 a metric ton), the lowest level for a most-active contract since Jan. 6, before trading at 268 yen on the Tokyo Commodity Exchange at 10:15 a.m. local time. Prices have trimmed this year’s advance to 1.7 percent.

The euro fell to an almost four-month low before a report forecast to show Europe’s economy contracted. Doubts mounted Greece can avoid an exit from the currency union as the region’s finance ministers meet for a second day in Brussels. Greece’s President will call a meeting of leaders of all parliamentary parties except for an ultra-nationalist party today to make the case for a government of prominent non-politicians.

“The European turmoil raised concerns the Chinese economic slowdown may worsen as the region is the biggest export market for China,” Ken Kajisa, an analyst at broker ACE Koeki Co. in Tokyo, said today by phone. China, the world’s largest auto market, is also the biggest rubber user.

China’s slowdown may deepen as policy makers unwind the excesses of a record credit boom while only gradually increasing stimulus, leaving 2012 growth at the weakest in 13 years, according to Pacific Investment Management Co.

Passenger-vehicle sales rose 1.9 percent in the first four months of the year, according to the China Association of Automobile Manufacturers. Auto demand rose 32 percent in 2010 after the government introduced subsidies and rebates to encourage buying, before slowing to 2.5 percent last year.

September-delivery rubber on the Shanghai Futures Exchange lost 2.4 percent to 24,270 yuan ($3,839) a ton at 9:23 a.m. local time. Thai rubber on a free-on-board basis dropped 0.6 percent to 117.25 baht ($3.74) a kilogram yesterday, according to the Rubber Research Institute of Thailand.






Tokyo futures hit 4-mth low as investors avoid risk (May 15)
May 15, 2012


TOKYO, May 15 (Reuters) – Tokyo rubber futures fell to a new four-month low on Tuesday as investors turned risk averse after a political impasse in Greece fanned the chance of a further rise in the yen currency and fed concerns about faltering demand for the industrial commodity.

The benchmark rubber contract on the Tokyo Commodity Exchange for October delivery settled at 270.1 yen per kg, down 9.1 yen from the previous close.

It earlier touched an intraday low of 265 yen, the lowest since Jan. 6.

“If the debt crises worsens in the euro zone and if the dollar falls clearly below 80 yen, that would put a further pressure on the Tokyo market,” said Naoki Asami, chief broker at trading house Kanetsu.

The dollar hovered at around 79.90 yen, above a 2-1/2-month low of 79.428 yen hit last week. A weaker dollar curbs yen-denominated TOCOM rubber prices even if dollar-based rubber prices in producing countries stay unchanged.

Some speculators who started building short positions this week seemed to bet on a further fall in the TOCOM market to 260 yen per kg and below, traders said, paving the way for a test of a November trough below 250 yen.

“The weak momentum in bargain-hunting suggests a higher chance of a downtrend. If the market breaks through below 260 yen, the next target would be 250 yen,” Asami said.

The most-active rubber contract on the Shanghai rubber exchange for September delivery closed down 390 yuan at 24,685 yuan per tonne.

The front-month June rubber contract on Singapore’s SICOM exchange was last traded at 332.0 U.S. cents per kg, down 0.9 cents.