Rubber Drops Most in Six Months as Greek Impasse Stokes Crisis

Rubber plunged by the most in six months as political turmoil in Greece deepened concerns Europe’s debt crisis may worsen, threatening the global recovery and sapping investor appetite for the commodity used in tires.
October-delivery rubber fell as much as 4.9 percent to 289.5 yen a kilogram ($3,629 a metric ton), the lowest for a most-active contract since Jan. 18, before trading at 291.7 yen on the Tokyo Commodity Exchange at 2:54 p.m. It was the largest drop since Nov. 10.
Speculation grew that Greece’s new government, when it’s formed, will reject terms of its rescue as New Democracy leader Antonis Samaras said he failed to assemble a coalition after weekend elections, passing the opportunity to Alexis Tsipras’s Syriza party. Tsipras said he plans to form a government of left-wing parties that would cancel the bailout accords.
“Political turmoil in Greece raised concerns that the nation may not implement austerity measures and worsen Europe’s debt crisis,” Ken Kajisa, an analyst at broker ACE Koeki Co. in Tokyo, said by phone. “Risk aversion by investors increased, leading to sales of industrial commodities including rubber.”
Futures also fell as oil traded near the lowest level in three months in New York, cutting the appeal of natural rubber as an alternative to synthetic products. A report yesterday showed stockpiles rose the most since March in the U.S.
September-delivery rubber in Shanghai lost 2.3 percent to 26,090 yuan ($4,134) a ton at the midday break. Thai rubber on a free-on-board basis fell 1.2 percent to 119.50 baht ($3.85) a kilogram yesterday, according to the Rubber Research Institute of Thailand. Rains spread across 80 percent of Thailand’s southern provinces, disrupting tapping, it said. The market is closed today for a public holiday.
To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net
To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net