Rubber Declines as Stock Markets Drop, U.S. Auto Sales Slump

By Jae Hur

Oct. 2 (Bloomberg) -- Rubber declined as global equity markets dropped and U.S. auto sales slumped in September, eroding optimism that demand may grow for the commodity used in tires and gloves.

Futures in Tokyo fell as much as 1.9 percent, paring this week’s gain. Japanese stocks fell after an unexpected drop in a U.S. manufacturing gauge and increasing jobless claims dragged down the Standard & Poor’s 500 Index to its biggest decline in three months. September U.S. auto sales fell after a purchasing incentive program left dealers’ inventory depleted.

“The rubber market was pressured by the drop in U.S. car sales and slumping equity markets,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today by phone. An eight-day holiday from yesterday in China, the world’s biggest consumer, also added pressure on the market, he said.

March-delivery rubber lost as much as 3.8 yen to 198.6 yen a kilogram ($2,128 a metric ton) on the Tokyo Commodity Exchange and closed at 200.8 yen. The most-active contract has risen 2.7 percent this week, heading for the first gain in three weeks.

The Nikkei 225 Stock Average declined 2.5 percent to 9,731.87 in Tokyo. The Standard & Poor’s 500 Index slumped 2.6 percent yesterday, the most since July 2.

U.S. auto sales plunged 23 percent, and the seasonally adjusted annual sales rate fell to 9.22 million units, said industry researcher Autodata Corp. of Woodcliff Lake, New Jersey.

Worse Than Estimates

GM deliveries tumbled 45 percent, while Toyota dropped 13 percent, both worse than analysts had estimated. Ford slid 5.1 percent, and Chrysler Group LLC, Honda Motor Co. and Nissan Motor Co. also posted declines.

There was little concern in Tokyo that the Sept. 30 earthquake off Indonesia’s Sumatra Island may disrupt rubber supplies to the country, Kikukawa said.

“The quake has had little impact on the market as Japan imports more from Thailand,” he said. Thailand is the world’s largest producer and exporter of rubber.

Rubber and palm oil shipments from Indonesia’s quake-hit provinces may be delayed by more than a week after access to a port was blocked and factories and roads were damaged, producers’ groups said. Indonesia is the world’s top producer of palm oil and second-biggest grower of rubber.

About 90,000 tons of palm oil for October delivery are likely to be delayed, Bambang Aria Wisena, head of organizational affairs at the Indonesian Palm Oil Association, wrote in a text message today. Transport problems may halt 50,000 to 60,000 tons of rubber, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said by phone.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net