Rubber Futures Fall to Nine-Month Low on China Demand Concern

Rubber declined for a second day to a nine-month low amid concern that a cash squeeze in China will hurt growth and damp demand.

The contract for delivery in November on the Tokyo Commodity Exchange dropped 0.7 percent to end at 229.9 yen a kilogram ($2,358 a metric ton), the lowest level at close since Sept. 7. Futures have plunged 24 percent this year.

China’s biggest squeeze on credit in at least a decade is increasing the chance that Li Keqiang will be the first premier to miss an annual growth target since the Asian financial crisis in 1998. Liquidity risks in the country’s financial markets are controllable and seasonal forces affecting interest rates will fade, a People’s Bank of China official said today.

“Risky assets including rubber were sold due to China concerns,” said Naohiro Niimura, a partner at research company Market Risk Advisory Co. in Tokyo.

China is the biggest rubber buyer, consuming 3.85 million tons last year, representing 34 percent of global consumption.

Rubber for September delivery on the Shanghai Futures Exchange rose 2.8 percent to close at 17,375 yuan ($2,827) a ton. Natural-rubber inventories rose for a third week, climbing 48 tons to 114,556 tons, the bourse said June 21.

Thai rubber free-on-board dropped 0.3 percent to 85.60 baht ($2.76) a kilogram today, according to the Rubber Research Institute of Thailand.

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