Market and product

Rubber dropped for a second day asthe sovereign debt crisis in Europe raised concern that demandfor the commodity used for tires may weaken.

The February-delivery contract fell as much as 1.8 percentto 362.1 yen a kilogram ($4,673 a metric ton) before trading at363.5 yen on the Tokyo Commodity Exchange at 11:29 a.m. localtime. Futures dropped 0.2 percent last week.

Oil slid for a third day in New York and Asian stocks fell,extending the benchmark index’s drop last week, amid signsEuropean policy makers are struggling to contain the region’sdebt crisis.

“Concerns on European debt crisis dampened market sentiment,” Naoki Asami, head of international department atKanetsu Shoji Co., said by phone from Tokyo. Volume is “verylight” as most investors are on the sidelines, he added.

Officials in Chancellor Angela Merkel’s government aredebating how to shore up German banks in the event that Greecefails to meet the budget-cutting terms of its aid package and isunable to get a bailout-loan payment, three coalition officialssaid Sept. 9. BNP Paribas SA, Societe Generale SA and CreditAgricole SA, France’s largest banks by market value, may havetheir credit ratings cut by Moody’s Investors Service as soon asthis week because of Greek holdings, two people with knowledgeof the matter said on Sept. 10.

“More Downside”

In Europe, “things are probably going to get worse beforethey get better,” Erwin Sanft, deputy head of Asian equitiesresearch at BNP Paribas SA in Hong Kong, said in an interview onBloomberg Television today. “Here in Asia, we’re looking atmuch more downside for markets. Much larger economies are beingdrawn into this crisis.”

Rubber has lost 12 percent this year after climbing to arecord 535.7 yen on Feb. 18. The European Union is the second-largest consumer of rubber and the U.S. is the fourth-largest,according to data from the Singapore-based International RubberStudy Group.

The market downside is likely to be limited as increasingimports from China showed the demand remains strong, Asami said.

Natural rubber imports by China in August were 200,000tons, said a statement on the custom agency’s website on Sept.10. That compares with 130,000 tons in July and 160,000 tons ayear ago, according to Bloomberg data.

Natural-rubber inventories rose 3,558 tons to 33,376 tons,the highest since March, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the ShanghaiFutures Exchange reported in its weekly report on Sept 9.

China’s passenger-car sales rose 3.3 percent in August froma year earlier to 1.04 million units, data from China’sPassenger Car Association showed last week.

In Shanghai, rubber for January delivery gained 1 percentto close at 34,095 yuan ($5,338) a ton on Sept. 9. The market isclosed for a public holiday today.

Rains spread across southern Thailand, disrupting tapping,according to the Rubber Research Institute of Thailand. The cashprice of Thai rubber declined 0.4 percent to 141.4 baht ($4.71)a kilogram on Sept. 9, according to the institute.