Rubber slumps on demand concern after China's car sales slow
Tuesday, 13 July 2010
TOKYO, July 12 (Bloomberg): Rubber declined for a second day after data showed car sales growth in China slowed, raising concern that demand may weaken from the largest consumer of the commodity used to make tires.
Futures in Tokyo dropped as much as 2.9 per cent to the lowest level since July 6. The price also declined as crude oil retreated from a one-week high, weakening the appeal of natural rubber as an alternative to synthetic products.
Sales of cars, sport-utility vehicles and multipurpose vehicles in China, the largest auto market, grew 19 per cent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said July 9. It was the slowest pace since March 2009 as dealers' inventories increased after inflation quickened in May to an annual 3.1 per cent rate, the fastest in 19 months, reducing buyers' spending power.
"Concern about Chinese car sales put a drag on rubber futures," Kazuhiko Saito, an analyst at Tokyo-based commodity broker Fujitomi Co, said Monday by phone.
December-delivery rubber lost as much as 7.9 yen to 265.1 yen per kilogramme ($2,983 a metric tonne) before settling at 265.5 yen on the Tokyo Commodity Exchange.
China's passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 per cent the preceding month as part of an economic stimulus package. Vehicle demand surged 46 per cent to 13.6 million last year, surpassing the US for the first time.
The small-car sales tax was raised to 7.5 per cent this year, and June was the third straight month of slowing demand. Monthly sales may decline from year-earlier levels during the second half of 2010, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report on May 26.
Losses in rubber futures were limited as Japan's currency weakened after the party of Prime Minister Naoto Kan lost control of the Japanese parliament's upper house, boosting the appeal of yen-based contracts.
The yen traded at 88.87 per dollar at 4:18 pm in Tokyo from 88.62 last week. Earlier it reached a two-week low of 89.16 as the election result may undermine the ruling party's efforts to cut the world's largest public debt.
In the cash market, Thai benchmark rubber price dropped 0.4 per cent to 112.35 baht ($3.47) per kilogramme Monday, according to the Rubber Institute of Thailand. Concerns over the global economic recovery sparked selling, while prices should be cushioned by limited supply, the group said.
Futures in Tokyo dropped as much as 2.9 per cent to the lowest level since July 6. The price also declined as crude oil retreated from a one-week high, weakening the appeal of natural rubber as an alternative to synthetic products.
Sales of cars, sport-utility vehicles and multipurpose vehicles in China, the largest auto market, grew 19 per cent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said July 9. It was the slowest pace since March 2009 as dealers' inventories increased after inflation quickened in May to an annual 3.1 per cent rate, the fastest in 19 months, reducing buyers' spending power.
"Concern about Chinese car sales put a drag on rubber futures," Kazuhiko Saito, an analyst at Tokyo-based commodity broker Fujitomi Co, said Monday by phone.
December-delivery rubber lost as much as 7.9 yen to 265.1 yen per kilogramme ($2,983 a metric tonne) before settling at 265.5 yen on the Tokyo Commodity Exchange.
China's passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 per cent the preceding month as part of an economic stimulus package. Vehicle demand surged 46 per cent to 13.6 million last year, surpassing the US for the first time.
The small-car sales tax was raised to 7.5 per cent this year, and June was the third straight month of slowing demand. Monthly sales may decline from year-earlier levels during the second half of 2010, Credit Suisse Group AG analysts Adrian Chan and Hung Bin Toh wrote in a report on May 26.
Losses in rubber futures were limited as Japan's currency weakened after the party of Prime Minister Naoto Kan lost control of the Japanese parliament's upper house, boosting the appeal of yen-based contracts.
The yen traded at 88.87 per dollar at 4:18 pm in Tokyo from 88.62 last week. Earlier it reached a two-week low of 89.16 as the election result may undermine the ruling party's efforts to cut the world's largest public debt.
In the cash market, Thai benchmark rubber price dropped 0.4 per cent to 112.35 baht ($3.47) per kilogramme Monday, according to the Rubber Institute of Thailand. Concerns over the global economic recovery sparked selling, while prices should be cushioned by limited supply, the group said.