Rubber Futures Fall as IMF Report, Toyota Add to Demand Concern

By Aya Takada

July 29 (Bloomberg) -- Natural rubber futures in Tokyo declined after the International Monetary Fund said there is no end in sight to the U.S. housing slump, heightening concern that demand for the commodity used in car tires may decrease.

Futures dropped as much as 0.6 percent after the IMF warned in a report yesterday that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth. Toyota Motor Corp., Asia's largest carmaker, yesterday cut its sales and production forecast for this year.

``The rubber market was weighed down by speculation that slowing economies may curb demand for cars and tires,'' Jun Nishimuta, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone.

Rubber for January delivery, the most-active by volume, fell 0.1 percent from its closing price yesterday to settle at 331.6 yen a kilogram ($3,080 a metric ton) on the Tokyo Commodity Exchange. The contract listed yesterday.

Toyota expects to sell 9.5 million vehicles worldwide in the year to Dec. 31, down 350,000 units, or 3.6 percent, from its initial estimate of 9.85 million, the company said in a statement yesterday. Toyota sold 9.37 million vehicles last year.

Automakers have been hurt this year by a drop in demand for less fuel-efficient models amid record gasoline prices and a sluggish economy.

Losses in futures were limited as a rise in crude oil raised the appeal of commodities as an inflation hedge, Nishimuta said.

Oil in New York gained after Royal Dutch Shell Plc reduced Nigerian production because of an attack on a pipeline.

Natural rubber reached a 28-year high of 356.9 yen June 30 as record oil prices boosted production costs for the rival synthetic product.

November-delivery rubber on the Shanghai Futures Exchange, the most-active contract, closed unchanged at 25,295 yuan ($3,705) a ton.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net