BLBG: Rubber Declines From Three-Week High as China May Raise Interest Rates
Rubber retreated from a three-week high on speculation that China, the world’s largest consumer, may raise interest rates to curb inflation, leading to slowdown in its economic growth and raw material demand.
May-delivery rubber on the Tokyo Commodity Exchange lost as much as 1.4 percent to 372.8 yen per kilogram ($4,525 a metric ton) before trading at 374.5 yen at 11:46 a.m. The price climbed yesterday to the highest level since Nov. 11, when it reached a 30-year high of 383 yen.
This weekend may be a “window” for China to raise rates, the China Securities Journal reported today, citing analysts at domestic banks and brokerages. China’s stocks fell the most in a week on speculation the government may take the additional step to tame the fastest inflation in two years.
“Concern about China’s rate increase is the biggest drag on the price of rubber futures,” Takaki Shigemoto, analyst at research company JSC Corp. in Tokyo, said today by phone. “China may take every possible measure to curb prices.”
May-delivery rubber on the Shanghai Futures Exchange dropped as much as 1.8 percent to 32,255 yuan ($4,849) a ton before trading at 32,535 yuan at 10:48 a.m. local time. It reached a record 38,920 yuan on Nov. 11.
China’s central bank may raise rates around the release of November’s inflation data, scheduled for Dec. 13, the newspaper reported, citing Li Huiyong, an analyst at Shenyin & Wanguo Securities Co, who forecast consumer prices may rise 5.1 percent last month. Lu Zhengwei, an economist at Industrial Bank Co., sees a rate increase as being likely between today and Dec. 18, the report said.
Shanghai Declines
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 37.81, or 1.3 percent, to 2,819.37 as of 10:14 a.m. The Shanghai gauge has lost 11 percent since reaching an almost seven-month high on Nov. 8 on concern that monetary tightening will curb economic growth.
China’s central bank last month ordered banks to set aside larger reserves for the second time in two weeks after raising interest rates in October, the first increase since 2007.
Losses in rubber futures were limited as supply was tight in Thailand, the world’s biggest producer and exporter, after rain and flooding reduced latex output, Shigemoto said.
The cash rubber price in Thailand climbed to a record 134.05 baht ($4.46) per kilogram on Dec. 3, according to the Rubber Research Institute of Thailand. The Thai market was closed yesterday for a holiday.
Global consumption of natural rubber will outstrip supply by 313,000 tons this year, the most since 2006, Goldman Sachs Group Inc. predicted in a November report, revising its September outlook for an 82,000-ton deficit.
Goldman Sachs raised its price forecast to $4.40 per kilogram next year from $3.60, and to $4.60 per kilogram in 2012 from $3.80, the report said.
To contact the reporters on this story: Aya Takada in Tokyo at atakada2@bloomberg.net;
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
