Rubber Retreats From 10-Month High as Chinese Demand May Slow

Rubber futures in Tokyo retreated from a 10-month high on expectations that demand in China, the world’s largest consumer, will slow during a holiday next week.

The contract for delivery in July lost as much as 1.2 percent to 330.1 yen a kilogram ($3,530 a metric ton) before trading at 331.4 yen on the Tokyo Commodity Exchange at 11:30 a.m. Futures rose to 334 yen yesterday, the highest settlement since March 28. Rubber has climbed 9.6 percent this year.

China’s markets are closed next week for the Lunar New Year holiday. On the Shanghai Futures Exchange, rubber for delivery in May lost 1.1 percent to 26,370 yuan ($4,229) a ton. China is forecast to represent 35 percent of global rubber consumption this year, according to RCMA Commodities Asia Group.

“Rubber in Shanghai came under pressure as investors are eager to lock in profits before the holiday,” said Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo. “The drop in Shanghai put a drag on futures in Tokyo.”

Futures also declined as Japan’s currency rebounded from an almost three-year low against the dollar, reducing the appeal of yen-denominated contracts, he said. The yen rose to 93.30 per dollar after dropping to 94.06, the lowest level since May 2010.

Thai rubber free-on-board gained 0.3 percent to 99.40 baht ($3.34) a kilogram yesterday, according to the country’s Rubber Research Institute.

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

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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