TOKYO (Dec 15): Benchmark Tokyo rubber futures hit a two-week low on Tuesday, extending losses into a fourth straight session, as investors unwound long positions amid nagging worries about oversupply and on weaker commodity prices and slumping Tokyo equities.
The Tokyo Commodity Exchange (TOCOM) rubber contract for May delivery <0#2JRU:> finished 4.1 yen, or 2.5%, lower at 162.1 yen (US$1.34) per kg, after touching its lowest level since Dec 1 at 161.9 yen earlier in the session.
“Investors stepped up selling as bearish sentiment broadened on slumping prices of oil and other commodities while persistent oversupply fear added to pressure,” said a Tokyo-based dealer who declined to be named.
Oil prices dipped on Tuesday, with Brent set to extend its losing streak to an eighth day, as investors remain concerned about a global glut and mild winter demand that sent prices close to 11-year lows during the previous session.
London copper dropped ahead of the Federal Reserve‘s crucial policy meeting this week, however, hopes for demand growth in top consumer China put a floor under prices.
Japan’s Nikkei share average fell to a 7½-week low in the face of volatile oil prices, and as investors avoided riskier assets ahead of an expected hike in U.S. interest rates later this week.
“Typically, December is a strong month for rubber prices, but the market had risen too quickly by early this month and it apparently has run out of steam,” the dealer said.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, had climbed to a nearly two-month high early last week, but they have since lost about 7%.
The most-active rubber contract on the Shanghai Futures Exchange for May delivery fell 60 yuan to finish at 10,120 yuan (US$1,566.56) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for January delivery last traded at 115.3 U.S. cents per kg, down 0.8 cent.
(US$1 = 6.4600 Chinese yuan)
(US$1 = 120.9700 yen)
