TOKYO, Oct 19 (Reuters) – TOCOM rubber futures slumped more than 3 percent to a three-week low on Friday as selling aimed to arbitrage against Shanghai rubber futures triggered a wave of selling after investors factored in optimism about demand from China.
Economic data earlier this week suggested China, the world’s biggest rubber consumer, likely hit the bottom of a seven-quarter long economic downturn between July and September.
But its Commerce Ministry cautioned on Friday, saying September trade data, which showed a surge in exports at twice the rate expected and a return to import growth, are not yet enough to confirm that a recovery is in place for the external sector.
“The TOCOM market dropped soon after the Shanghai market was sold off,” said Kaname Gokon, vice general manager at Okato Shoji, a commodity brokerage.
“A fall below a key level of 255 yen is increasing the market’s downside risk toward 245 yen,” he said.
The Tokyo Commodity Exchange rubber contract for March delivery settled down 10 yen, or 3.8 percent, at the day’s low of 255.4 yen per kg.
It was the lowest level since Sept. 28. The benchmark contract fell 3.4 percent on the week, extending declines into a second week.
An extended fall in domestic rubber stocks in Japan had provided little help.
Industry data showed on Friday crude rubber inventories at Japanese ports fell to a two-year low of 5,706 tonnes as of Oct. 10, having fallen 354 tonnes over the previous 10 days.
The most active Shanghai rubber contract for January delivery fell 710 yuan to 24,860 yuan per tonne.
The front-month November rubber contract <on the SICOM in Singapore was last traded at 289 U.S. cents per kg, down 8.3 cents.
(Reporting by Risa Maeda; Editing by Anand Basu)
Source: Reuters
