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Wednesday, August 17, 2022

Rubber Falls to Near 17-Month Low as U.S. Factory Growth Slows

Rubber futures in Tokyo declined to the lowest level in almost 17 months after signs of slowing global industrial output boosted demand for the Japanese currency as a haven.

The commodity for delivery in July fell as much as 2.3 percent to 221.8 yen a kilogram ($2,192 a metric ton) on the Tokyo Commodity Exchange, the lowest intraday price for a most-active contract since Sept. 6, 2012. Futures traded at $223.3 yen by 10:25 a.m. local time, down 19 percent this year after entering a bear market last week.

The U.S. Institute for Supply Management’s factory index decreased to 51.3 in January, the weakest pace in eight months, data showed yesterday. That’s lower than the most pessimistic forecast in a Bloomberg survey of economists and 56.5 the prior month. The yen traded near a two-month high against the dollar as Asian stocks extended a global selloff, raising investor appetite for the Japanese currency as a haven. A stronger yen cuts the appeal of contracts based in the currency.

“Data signaling a slowdown in the U.S. economy eroded investor confidence in global growth, leading to the selling of industrial commodities,” said Hideshi Matsunaga, an analyst at Evolution Japan Co., a Tokyo-based broker.

Rubber free-on-board at Songkhla, Thailand, retreated 0.7 percent to 70.75 baht ($2.15) a kilogram yesterday, according to the Rubber Research Institute of Thailand.

Markets in China are closed through Feb. 6 for Lunar New Year holidays. Futures for May delivery on the Shanghai Futures Exchange dropped 1 percent to close at 15,480 yuan ($2,554) a ton on Jan. 30. Stockpiles monitored by the bourse expanded 1.6 percent to 207,658 tons last week, the largest amount since October 2004, exchange data showed.


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