Rubber Drops Fifth Day as U.S. Spending Deepens Growth Concern

By Aya Takada

Feb. 3 (Bloomberg) -- Natural rubber futures dropped for a fifth day after U.S. consumer spending recorded an unprecedented sixth monthly decline in December, deepening concern car sales may drop further and erode demand for the commodity used in tires.

Prices in Tokyo lost as much as 2.8 percent to the lowest since Dec. 26. The U.S. Commerce Department said yesterday personal spending fell 1 percent in December. A Federal Reserve report showed a majority of U.S. banks made it tougher for consumers to get credit in the past three months even as lenders received infusions of taxpayer funds.

“The data strengthened concern auto sales may decrease further, leading to a deeper drop in rubber demand,” Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.

Rubber for July delivery, the most-active contract, fell 0.8 percent to 133.5 yen a kilogram ($1,487 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Rubber futures lost 1.9 percent this year as a deepening recession spurred investors to cut holdings of the industrial commodity.

In Japan, the world’s third-biggest rubber importer, sales of cars, trucks and buses fell 28 percent to 174,281 vehicles in January, excluding minicars, the Tokyo-based Japan Automobile Dealers Association said in a statement yesterday. It was the biggest monthly drop since May 1974.

India Production

Natural rubber output in India, the world’s fourth-biggest producer, declined 9 percent last month after dry weather and a slump in prices prompted growers to extract less latex, the Rubber Board said yesterday.

Production in January fell to 94,000 tons, compared with 103,515 tons a year ago, G. Mohana Chandran, joint director at the state-owned Rubber Board said, citing preliminary data.

Natural rubber demand in India will decline to 862,000 tons in the year ending March from 899,000 tons estimated in April as demand from tire producers slows amid a drop in car sales, Rubber Board Chairman Sajen Peter said last week.

May-delivery rubber on the Shanghai Futures Exchange, the most-active contract, added 0.9 percent to 12,645 yuan ($1,847) a ton at 10:55 a.m. local time.

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