Rubber Gains from Two-Month Low as Weaker Yen Boosts Appeal

By Aya Takada

Feb. 20 (Bloomberg) -- Natural rubber futures gained for the first time this week after the Japanese currency slumped to a six-week low against the dollar yesterday, making the yen- denominated contracts more attractive to investors.

Futures in Tokyo gained as much as 2 percent, recovering from a two-month low reached yesterday. A weaker yen is positive for the price of futures as rubber trades globally in dollars.

“Futures were supported by speculation that the yen may retreat further against the dollar as the Japanese economy contracts more severely,” Takaki Shigemoto, an analyst at Tokyo- based commodity broker Okachi & Co., said today by phone.

Rubber for July delivery, the most-active contract, added 0.6 percent to 132.8 yen a kilogram ($1,410 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Prices lost 7.5 percent this week, heading for the largest loss since the week ended Jan. 23, as concerns deepened that a worsening slump in global economies will weaken raw material demand further.

The Japanese government lowered yesterday its assessment of the economy for a fifth month after gross domestic product contracted at the fastest pace in almost 35 years. The world’s second-largest economy shrank at the steepest pace since the 1974 oil shock last quarter and economists expect the nation to post a record contraction in the year starting April 1.

The government also downgraded its assessment of imports and consumer spending, as a record drop in exports and output spread to households. Exporters from Toyota Motor Corp. to Sony Corp. are firing thousands of workers in a response to an unprecedented decline in overseas demand.

Lower Offers

In the cash market, shippers in Thailand, the world’s biggest producer and exporter, lowered offers for RSS-3 grade rubber for April shipment to $1.47 a kilogram today from $1.52 on Feb. 16 amid a weak demand, Shigemoto said.

Bridgestone Corp., the world’s largest tiremaker by sales, said yesterday it forecast a 71 percent profit drop this year as tire sales are expected to decline in Japan, North America and Europe.

Toyota Motor Corp., the world’s biggest carmaker, will slash domestic production 54 percent in the current quarter as demand plunges in the U.S. and Japan. The company’s output, excluding its Daihatsu Motor Co. and Hino Motors Ltd. units, will drop to about 519,000 vehicles in the three months ending in March, compared with 1.13 million units a year ago, according to figures derived from Toyota’s latest full-year forecast.

May-delivery rubber on the Shanghai Futures Exchange, the most-active contract, lost 0.1 percent to 12,685 yuan ($1,856) a ton at 10:39 a.m. local time.

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