TOKYO — Rubber futures in Tokyo and Shanghai declined to the lowest level since 2009 on Friday 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% to settle at 206.4 yen a kilogramme ($2,016 a tonne), the cheapest since October 2009. Rubber for delivery in the same month on the Shanghai Futures Exchange dropped 4.1% at 14,200 yuan ($2,282) a tonne, the lowest close since April 2009.
A worker removes smoked rubber sheets from a rack to be trimmed at the Thai Hua Rubber factory in Samnuktong, Rayong province, on Jan 29, 2014. (Bloomberg photo)
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% more than estimated in December, according to The Rubber Economist Ltd. The commodity used in tyres dropped into a bear market in January and is down 25% 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 tonnes in 2014, compared with 366,000 tonnes 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% to 12.04 million tonnes from 11.59 million tonnes forecast in December.
Thai rubber free-on-board fell 1.4% to 71.45 baht a kg on Friday, according to the Rubber Research Institute of Thailand. Prices are down 2.1% this week, the most since the period through Feb 7.