Rubber drops for second day as Yen gains, China stockpiles swell

January 20, 2014

Rubber-production-in-Thailand

Rubber in Tokyo declined for a second day, to the lowest level in almost a week, as a stronger Japanese currency cut the appeal of yen-denominated futures and stockpiles swelled in China.

The contract for delivery in June on the Tokyo Commodity Exchange lost as much as 1.5 percent to 249.2 yen a kilogram ($2,397 a metric ton), the lowest level since Jan. 14. Futures traded at 250.8 yen at 10:27 a.m. local time, extending loses to 8.5 percent this year.

Stockpiles monitored by the Shanghai Futures Exchange increased 5.6 percent to 200,815 tons, the highest level since October 2004, data from the bourse showed on Jan. 17. It was the seventh straight week of gain. The yen rose to 103.86 a dollar before data from China’s factory output to economic growth.

“Concerns are growing that the Chinese market is oversupplied,” said Naohiro Niimura, a partner at research company Market Risk Advisory Co. in Tokyo.

China’s industrial production and investment growth probably weakened in December, adding to signs the world’s second-largest economy is losing momentum as analysts forecast 2014 expansion at the lowest in 24 years. Rubber inventories in Qingdao, China’s main hub for the commodity, advanced 4.7 percent from the end of last month to 304,300 tons on Jan. 16, according to the Qingdao International Rubber Exchange.

Futures for May delivery on the Shanghai Futures Exchange added 0.6 percent to 16,730 yuan ($2,764) a ton. Rubber free-on-board fell 0.6 percent to 77.25 baht ($2.35) a kilogram on Jan. 17, according to the Rubber Research Institute of Thailand.

Rubber production in Thailand, the biggest exporter, declined as price slump discouraged farmers from tapping latex and some producers joined protests in Bangkok, according to Sirirat Rattanamontri, an officer at state-run Surat Thani rubber market.

Source: Bloomberg
Published: 20 Jan 2014

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