Rubber Futures Slump to Lowest Since 2009 as China Growth Slows

Apr 18, 2014 4:51 am ET

April 18 (Bloomberg) -- Rubber futures in Tokyo and Shanghai declined to the lowest level since 2009 on concern that slowing economic growth in China will reduce demand from the top user amid a global surplus.

The contract for delivery in September on the Tokyo Commodity Exchange lost 4 percent to settle at 206.4 yen a kilogram ($2,016 a metric ton), the cheapest since October 2009. Rubber for delivery in the same month on the Shanghai Futures Exchange dropped 4.1 percent at 14,200 yuan ($2,282) a ton, the lowest close since April 2009.

The benchmark contract in Tokyo fell for a fifth week as China’s economy moderated at the weakest pace in six quarters and new-home price increases eased across the country last month amid tighter credit. A global surplus this year will be 78 percent more than estimated in December, according to The Rubber Economist Ltd. The commodity used in tires dropped into a bear market in January and is down 25 percent this year.

“Amid a lack of positive news from China, the selling of futures increased,” said Gu Jiong, an analyst at Yutaka Shoji Co., a broker in Tokyo. “The price slump accelerated after large-lot sell orders from speculators overseas.”

China’s slowdown may worsen a global glut of rubber, according to Takaki Shigemoto, an analyst at JSC Corp., a researcher in Tokyo.

The excess is estimated at 652,000 tons in 2014, compared with 366,000 tons predicted in December, as demand slows and output in the largest grower Thailand surpasses forecasts, according to The Rubber Economist. The London-based industry adviser increased its estimate for world output last year by 3.9 percent to 12.04 million tons from 11.59 million tons forecast in December.

Thai rubber free-on-board fell 1.4 percent to 71.45 baht ($2.22) a kilogram today, according to the Rubber Research Institute of Thailand. Prices are down 2.1 percent this week, the most since the period through Feb. 7.