Rubber Reaches 5-Month Low as China Manufacturing Index Declines

Jan 23, 2014 2:36 am ET

Jan. 23 (Bloomberg) -- Rubber extended losses for a fifth day to the lowest level in five months after a gauge of Chinese manufacturing fell below estimates, deepening concern that demand from the largest consumer may weaken.

The contract for delivery in June on the Tokyo Commodity Exchange lost 0.4 percent to 247.2 yen a kilogram ($2,369 a metric ton), the lowest settlement since Aug. 7. Futures have fallen 10 percent this month, after a 9.3 percent slump in 2013.

The preliminary reading of 49.6 for a Purchasing Managers’ Business Index released by HSBC Holdings Plc and Markit Economics compared with a final figure of 50.5 in December and a 50.3 median estimate of 19 analysts in a Bloomberg News survey. A number above 50 indicates expansion.

“Speculation grew that rubber demand from China may lose strength, as data showed an economic slowdown,” said Hideshi Matsunaga, an analyst at Evolution Japan Co., a broker in Tokyo.

Today’s report came after data earlier this week showed gains in factory output eased last month, sapping momentum as a credit clampdown adds pressure on the outlook. China’s growth slowed to 7.7 percent in the fourth quarter from 7.8 percent in the July-September period, according to Jan. 20 figures from the statistics bureau.

Futures in Tokyo earlier advanced 1.2 percent amid concerns anti-government protests in Thailand may curb supply from the world’s largest exporter. Thai output may drop 10 percent to 20 percent this month and in February from an average of 300,000 tons to 350,000 tons a month, according to Bundit Kerdvongbundit, vice president of Von Bundit Co., Thailand’s second-largest producer.

Rubber for May delivery on the Shanghai exchange lost 0.2 percent to close at 16,560 yuan ($2,736) a ton. Rubber free-on- board dropped 0.7 percent to 76.25 baht ($2.31) a kilogram today, according to the Rubber Research Institute of Thailand.

--With assistance from Supunnabul Suwannakij in Bangkok. Editors: Jarrett Banks, Brett Miller