Rubber Gains for First Day in Seven as Low Prices Lure

Rubber gained for the first time in seven sessions as investors bought the commodity after the price tumbled to a two-month low amid concern that car-sales growth is slowing in China, the largest consumer.
The August-delivery contract climbed as much as 3.3 percent to 426 yen a kilogram ($5,144 a metric ton) before trading at 423.3 yen on the Tokyo Commodity Exchange at 12:32 p.m. local time today (Mar.10). The contract dropped as low as 401 yen yesterday, the lowest level since Dec. 20.
“It’s a short-covering rally as the recent slump in the market was seen as excessive by investors,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said today (Mar.10) by phone. “Gains will be limited by concerns about the negative impact of higher fuel costs on economies and car sales.”
Rubber futures lost 14 percent in the six days through Mar.9 as violence in Libya lifted oil prices above $100 a barrel, strengthening concern that higher energy costs may damage the economic recovery and weaken sales of cars and tires.
The bourse raised the margin requirement on rubber trading to 143,000 yen, from 95,000 yen, beginning from after-hours trading yesterday (Mar.9).
China’s passenger-car sales growth in February was the slowest in more than two years after the government ended vehicle-buying incentives and demand dropped. Sales of passenger cars including multipurpose and sport-utility vehicles increased 2.6 percent from a year earlier to 967,200 units last month, the China Association of Automobile Manufacturers said yesterday (Mar.9). That’s the slowest pace of growth since January 2009, when car purchases fell 7.8 percent. Automakers including General Motors Co., Toyota Motor Corp., and Honda Motor Co. have seen deliveries slow this month after China reinstated a 10 percent sales-tax on small cars this year and phased out subsidies for vehicle trade-ins in rural areas. Last year, overall auto sales surged 32 percent to a record 18.06 million, helping China remain the world’s largest vehicle market for the second straight year.
Crude oil advanced as fighting in Libya, Africa’s third-largest producer, shut the country’s biggest crude-processing plant. Forces loyal to leader Muammar Qaddafi carried out the strikes on oil facilities
In Shanghai, May-delivery rubber gained 0.3 percent to 36,465 yuan ($5,547) a ton.
The physical price of Thai rubber fell for a sixth day, dropping to 164.75 baht ($5.44) a kilo today amid concerns that tire demand may decline as Chinese buyers delay purchases, according to the Rubber Research Institute of Thailand. The price reached a record 198.30 baht on Feb. 21.
(Bloomberg, Tokyo, Mar. 10, 2011)