Rubber Futures Tumble to Three-Year Low on Recession Concern

By Rattaphol Onsanit

Oct. 16 (Bloomberg) -- Natural rubber futures in Tokyo sank to a three-year low as the specter of a global recession deepened concern that car tire demand will slump.

The commodity fell a second day, tumbling 8.9 percent to its lowest price since August 2005, as plunging stocks, tightening credit and job cuts worldwide dimmed the outlook for car sales. Rubber is the main raw material for tires.

``The world economy is slowing down,'' Roka Komiya, a trader at Marubeni Corp. in Tokyo, said today. ``Tire demand may fall.''

Rubber for March delivery lost 15.9 yen to 162.2 yen a kilogram ($1,616 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. break. The most-active contract reached a 28-year high of 356.9 yen June 30 as record oil prices boosted production costs for the rival synthetic product.

Prices also fell as investors quit commodities after the biggest plunge in U.S. stocks since 1987 heightened concern government bank bailouts won't help revive raw-material consumption. Crude oil fell for a third day and traded near a 13- month low. Copper and soybeans also slumped.

January-delivery rubber on the Shanghai Futures Exchange, the most-active contract, fell 6 percent to 13,180 yuan ($1,930) a ton at 11 a.m. local time.

Vehicle sales in China, the largest rubber consumer, fell for a second month in September as sales of passenger cars, trucks and buses fell 2.7 percent to 751,700, the China Association of Automobile Manufacturers said Oct. 10.

The recent plunge in prices may prompt rubber buyers in China to default on more than 10,000 metric tons of the commodity, Li Shiqiang, general manager at Sri Trang (Shanghai) Ltd., a unit Thailand's largest publicly traded rubber exporter, said yesterday.

To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net