Rubber Ends Two Days of Gains as Japan’s Recession Deepens

By Aya Takada

Dec. 9 (Bloomberg) -- Natural rubber futures dropped for the first time in three days as Japan’s economy shrank faster than expected in the third quarter, adding to concern that demand in the world’s third-biggest importer will weaken further.

Prices in Tokyo fell as much as 9.4 percent to 106.6 yen a kilogram ($1,149 a metric ton), having reached a six-year low of 99.8 yen on Dec. 5. Gross domestic product contracted at an annual 1.8 percent pace in the three months ended Sept. 30, Japan’s Cabinet Office said today. Economists surveyed by Bloomberg predicted a 0.9 percent decline.

“The negative economic data hurt the market sentiment further,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today by phone.

Rubber for May delivery lost 8.2 percent to 108.1 yen on the Tokyo Commodity Exchange at the 11 a.m. local time break. Futures have plunged 70 percent from the 28-year high of 356.9 yen reached on June 30 as the global recession slashed car sales and reduced demand for tires.

Car sales in China, the world’s largest rubber user, plunged 10 percent in November, the biggest decline in more than three years, the China Association of Automobile Manufacturers said Dec. 5. Sales dropped for the third time in four months, sinking to 522,800 cars, sport-utility and multipurpose vehicles.

Dwindling sales in China, the world’s second-biggest auto market, are adding to the plight of automakers already wrestling with waning demand in the U.S., Europe, Japan, Brazil and India.

Thailand, Indonesia and Malaysia, the world’s three biggest rubber producers and exporters, will discuss price measures at a meeting in Indonesia later this week.

Thailand, the biggest producer, will ask Indonesia and Malaysia to buy the raw material from farmers to stem the slump in prices, Somchai Charnnarongkul, director-general of the Thai farm ministry’s department of agriculture, said Dec. 4.

March-delivery rubber on the Shanghai Futures Exchange, the most-active contract, fell 3.7 percent to 9,050 yuan ($1,316) a ton at 11 a.m. local time.

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