Rubber futures fell in Tokyo, heading for a yearly loss, as growing stockpiles in China increased concern that demand may slow in the biggest buyer of the commodity used in tires.
The contract for delivery in June on the Tokyo Commodity Exchange lost as much as 1 percent to 274.5 yen a kilogram ($2,605 a metric ton) before trading at 275.7 yen at 11:51 a.m. local time. Futures gained 2 percent this month while dropping 8.9 percent during volatile trading in 2013 that saw the material slump into a bear market in April and bounce back into a bull market in August.
Inventory monitored by the Shanghai Futures Exchange rose to 174,498 tons by Dec. 26, the highest level since 2004, data from the bourse showed. Crude rubber stockpiles held at Japanese warehouses climbed 3.6 percent to 11,965 metric tons on Dec. 20, the highest level since June, according to data from the Rubber Trade Association of Japan.
“Investors are adjusting positions ahead of New Year holidays amid concerns that high stock levels in China and Japan will weaken demand,” said Ryuta Imazeki, an analyst at Tokyo-based Okachi & Co. “The downside is limited by the weak yen and rising oil prices.”
Then yen retreated 105.41, the lowest level in more than five years, amid speculation a sustained U.S. economic recovery will allow the Federal Reserve to cease bond purchases by the end of 2014. A lower Japanese currency makes yen-based contracts more attractive to investors.
Futures for May delivery on the Shanghai exchange fell 0.5 percent to 18,335 yuan ($3,023) a ton, extending an annual decline to 31 percent.
Thai rubber free-on-board was unchanged at 83.15 baht ($2.52) a kilogram on Dec. 27, according to the Rubber Research Institute of Thailand.
Source: Bloomberg
