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Rubber Drops for Third Day as Delayed Stimulus May Curb Demand

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Jan. 23 (Bloomberg) -- Rubber declined for a third day after the Japanese central bank deferred new monetary stimulus, strengthening the yen and sapping investor appetite for the commodity used in tires.

Rubber for delivery in June lost 1 percent to settle at 308.3 yen a kilogram ($3,488 a metric ton) on the Tokyo Commodity Exchange, paring this year’s advance to 1.9 percent.

Japan’s currency rose, set for the biggest three-day gain in 17 months, on speculation Japanese consumer price data this week will add to evidence that the central bank’s monetary stimulus is failing to stoke inflation. The Bank of Japan said yesterday it will buy about 13 trillion yen in assets per month from January 2014. The decision disappointed investors who had expected immediate easing, said Hideshi Matsunaga, an analyst at broker ACE Koeki Co. in Tokyo.

“Futures lost support from the currency market after the BOJ meeting,” Matsunaga said today by phone.

Losses were limited after the International Rubber Study Group forecast a global surplus may contract this year and next from a record in 2012 because of rising U.S. and China demand.

Production is set to outpace consumption by 179,000 tons this year and 153,000 tons in 2014, said senior economist Lekshmi Nair, who estimates last year’s glut at 460,000 tons. The Singapore-based IRSG is an inter-governmental group of 35 producing and consuming nations and 120 industry members.

Rubber for delivery in May dropped 0.1 percent to close at 26,085 yuan ($4,195) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board dropped 0.2 percent to 98.55 baht ($3.30) a kilogram today, according to the Rubber Research Institute of Thailand.

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

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

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