TOKYO (Jan 5): Benchmark Tokyo rubber futures fell to their lowest in nearly seven years on Tuesday, as investors continued to sell amid worries about shaky stock markets in China and Japan and renewed concerns over softening demand in top buyer China.
The Tokyo Commodity Exchange (TOCOM) rubber contract for June delivery finished 2.2 yen or 1.4%, lower at 150.6 yen (US$1.26) per kg. It earlier hit a low of 149.1 yen, the lowest since March 26, 2009.
“Investors increased short positions as they worried about Chinese stock market that plunged on Monday,” said Hiroyuki Kikukawa, general manager at Nihon Unicom Inc.
China stocks closed mixed on Tuesday in volatile trade, with indexes swinging into and out of negative territory as government support measures struggled for traction in afternoon trade.
Japanese stocks fell for a second day in choppy trade to a fresh 2-1/2-month low, after Chinese stocks returned to negative territory, capping investors’ risk appetite.
On the plus side, the yen’s rally against the dollar stalled, after as a slide in China’s share markets halted, although the dealers remained on guard, as it was uncertain whether Chinese equities had found a bottom.
“The rubber market tends to be strong in January and February, as it gets closer to the wintering season, but I think the rubber prices will go down further before setting a floor,” Kikukawa said.
Rubber is tapped year round, but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand and Malaysia lasts from February to April.
The most active rubber contract on the Shanghai Futures Exchange for May delivery fell 60 yuan to finish at 10,190 yuan (US$1,563.03) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 109.5 U.S. cents per kg, down 1.3 cent.
(US$1 = 119.4400 yen)
(US$1 = 6.5194 Chinese yuan)
