Rubber Drops as Greek Political Impasse Stokes Crisis in Europe

Rubber slumped by the most in more than four months as political turmoil in Greece deepened concerns Europe’s debt crisis may worsen, threatening the global recovery and sapping investor appetite for commodities.

October-delivery rubber lost 4 percent to end at 292.3 yen a kilogram ($3,662 a metric ton), the lowest settlement level on the Tokyo Commodity Exchange for the most-active contract since Jan. 17. The day’s drop was the worst since Dec. 15.

Speculation grew that Greece’s new government, when it’s formed, will reject terms of its rescue after as New Democracy leader Antonis Samaras failed to assemble a coalition following 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 close at 26,100 yuan ($4,136) a ton, the lowest close since Jan. 16. 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 holiday.