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Rubber drops most in eight days as oil slips

Rubber drops most in eight days as oil slips
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First Published: Tue, Apr 21 2009. 12 50 AM IST
Updated: Tue, Apr 21 2009. 12 50 AM IST
Bangkok: Natural rubber declined by the most in eight days as lower oil prices boosted the appeal of its synthetic rival and concerns increased that a recession is cutting demand from tyre makers, the biggest consumers.
Futures in Tokyo tumbled as much as 3.3%, falling for a third day. Crude oil dropped to as low as $49.30 a barrel, helping cut the cost of producing synthetic rubber made from petroleum-derived naphtha.
Rubber is following oil today, said Masami Aratake, a trader at Newedge Japan Inc. in Tokyo. Also, there is little demand from tyre makers.
Rubber for September delivery lost 2.6% to 166.8 yen a kg ($1,688 a tonne) on the Tokyo Commodity Exchange at 12:55 pm local time. Global sales of passenger car and commercial vehicle tires may tumble as low as 1.32 billion units in 2009 from 1.41 billion last year, said No Dock Moung, an analyst with the Singapore-based International Rubber Study Group, which represents producers and users. The drop would be the most since at least 1975, he said last week.
A benchmark rubber contract in Singapore closed last week at $1,530 a tonne, 18% higher than alternatives made from oil, data compiled by Bloomberg show.
Michael Coleman, who helps manage a commodity fund that returned 24% last year, and Felix Yeo, trading manager at the Singapore unit of Marubeni Corp., said prices may weaken as much as 35%.
The advance in global commodity prices this year is a little premature because there’s no evidence of improved demand, Sean Corrigan, who helps manage $5 billion in commodities at Diapason Commodities Management SA in Lausanne, Switzerland, said last week.
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First Published: Tue, Apr 21 2009. 12 50 AM IST
More Topics: Rubber | Oil | Tyre makers | Recession | Slowdown |