Rubber Touches 5-Month Low as Yen Gains, China Stockpiles Swell

Jan 20, 2014 2:59 am ET

Jan. 20 (Bloomberg) -- Rubber slipped to a five-month low as a stronger Japanese currency cut the appeal of yen- denominated futures and as stockpiles swelled in China, the biggest consumer of the commodity used in tires.

The contract for delivery in June on the Tokyo Commodity Exchange dropped 0.3 percent to end at 252.3 yen a kilogram ($2,421 a metric ton), the lowest settlement for a most-active contract since Aug. 7. Futures have lost 8.1 percent this month, after slumping 9.3 percent last year.

Stockpiles monitored by the Shanghai Futures Exchange increased 5.6 percent to 200,815 tons, the largest 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, the strongest level since Jan. 14.

“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 economic growth slowed in the fourth quarter as gains in factory output and investment spending eased last month, data showed today. The nation’s industrial production grew 9.7 percent in December, the slowest pace since July.

Rubber inventories in Qingdao, China’s main hub for the commodity, rose 4.7 percent from end-December to 304,300 tons on Jan. 16, according to the Qingdao International Rubber Exchange.

Futures for May delivery on the Shanghai Futures Exchange added 1.2 percent to close at 16,830 yuan ($2,781) a ton. Rubber free-on-board was unchanged at 77.25 baht ($2.35) a kilogram, according to the Rubber Research Institute of Thailand.

Supplies from Thailand’s southern province are limited as some growers joined protests in Bangkok, reducing tapping, Sirirat Rattanamontri, an officer at state-run Surat Thani rubber market, said by phone today.

--With assistance from Supunnabul Suwannakij in Bangkok. Editors: Sungwoo Park, Brett Miller