Feb. 24 (Bloomberg) — Natural rubber futures declined as a sell-off in global equity markets deepened concern that a worsening economic slump will weaken demand for the commodity used in tires.

Prices in Tokyo lost as much as 3.5 percent. Asian equities slid, dragging the regional benchmark to the lowest in more than five years. The MSCI Asia Pacific Index is set for its lowest close since August 2003. The widening global recession has slashed sales and output of vehicles.

“A slump in global equities spurred investors to cut holdings of risk assets,” Jun Nishimuta, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone.

Rubber for July delivery fell 2.9 percent to close at 132 yen a kilogram ($1,386 a metric ton) on the Tokyo Commodity Exchange. Rubber for August delivery, listed on the exchange today, ended at 134 yen.

Rubber futures also declined as falling crude oil pared the cost of making rival synthetic product, Nishimuta said.

Oil fell as much as 2.1 percent, losing for a third day on speculation that U.S. stockpiles will rise for the 19th week in the past 22 as the economic slowdown crimps fuel demand.

Toyota Motor Corp., Honda Motor Co. and other Japanese carmakers may post at least a combined 20 percent drop in February local sales as the economic recession damps demand, the Japan Automobile Dealers Association said today.

“February’s numbers are looking very bad,” Chairman Yoichi Amano told reporters in Tokyo. Sales in March are “certain” to show a comparable decline, he said.

Japan’s vehicle sales, excluding minicars, fell 28 percent last month, the biggest monthly drop since May 1974. Japan is headed for its worst postwar recession as factory output slumped an unprecedented 9.6 percent in December and unemployment surged.

May-delivery rubber on the Shanghai Futures Exchange, the most-active contract, lost 4 percent to close at 12,590 yuan ($1,841) a ton.

Source: Bloomberg

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