Feb. 5 (Bloomberg) -- Rubber settled at the lowest level in 17 months amid speculation that large stockpiles in China will keep demand subdued from the world’s biggest user.
The contract for delivery in July lost 0.1 percent to 220.5 yen a kilogram ($2,176 a metric ton) on the Tokyo Commodity Exchange, the lowest settlement for a most-active contract since Sept. 5, 2012. The commodity entered a bear market last week and has lost 20 percent this year.
Markets in China are closed through Feb. 6 for Lunar New Year holidays. Rubber stockpiles monitored by the Shanghai Futures Exchange expanded 1.6 percent to 207,658 tons last week, the largest amount since October 2004, exchange data showed.
“Chinese buying may not pick up, even after they return from the Lunar New Year holiday, as stockpiles are at a very high level,” said Kazuhiko Saito, an analyst at broker Fujitomi Co in Tokyo.
Prices rose earlier amid expectations that supply will decrease as Thailand enters a low-production season this month, he said. The period begins in late February in top growers including Thailand and Malaysia, according to the International Rubber Consortium.
A global surplus may narrow to 241,000 tons this year from 384,000 tons last year if global economies grow in line with the outlook from the International Monetary Fund, according to data from the International Rubber Study Group.
Rubber free-on-board at Songkhla, Thailand, retreated 0.7 percent to 70 baht ($2.14) a kilogram today, according to the Rubber Research Institute of Thailand.
--Editors: Jarrett Banks, Sungwoo Park