Rubber Drops Most in a Week as China, Japan Stockpiles Climb

March 12 (Bloomberg) -- Rubber tumbled the most in more than a week on concern that rising inventories in China and Japan may curb demand.

The contract for delivery in August fell 2.9 percent to close at 292.5 yen a kilogram ($3,032 a metric ton) on the Tokyo Commodity Exchange, the biggest decline since March 1.

Stockpiles held at Japanese warehouses rose 3.8 percent to 11,363 tons on Feb. 28, the Rubber Trade Association of Japan said yesterday. Inventories in China, the largest user, jumped to 107,481 tons, the highest level in three years, based on a survey of nine warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the Shanghai Futures Exchange said March 8.

“Inventories are at high levels in China and Japan because demand is still weak,” Gu Jiong, an analyst at commodity broker Yutaka Shoji Co., said by phone from Tokyo today.

Total vehicle sales in China fell 14 percent from a year earlier to 1.35 million units in February, the China Association of Automobile Manufacturers said.

Futures also declined as some investors may be switching to stocks from commodities, Naohiro Niimura, a partner at research company Market Risk Advisory in Tokyo, said in an e-mail.

The contract for September delivery on the SHFE fell 3.2 percent to close at 23,240 yuan ($3,739) a ton. Thai rubber free-on-board dropped 0.8 percent to 90.30 baht ($3.05) a kilogram today, according to the Rubber Research Institute of Thailand.

--Editors: Jarrett Banks, James Poole