TOKYO (July 26): Benchmark Tokyo rubber futures slid to a 2-week low on Tuesday, extending losses into a third session, as a stronger yen and bearish sentiment on oil prompted a flurry of selling while continued falls in Shanghai rubber futures added to pressure.
The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery <0#2JRU:> finished at 153.7 yen (US$1.47) per kg, down 3.3 yen, or 2.1%, from an opening price of 157.0 yen.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, earlier plunged to a low of 152.9 yen, the weakest since July 12.
“A higher yen and falling Shanghai futures were behind the sell-off,” said Toshitaka Tazawa, an analyst at Fujitomi Co.
The dollar slipped ahead of the US Federal Reserve’s two-day policy meeting that begins later on Tuesday, while the yen gained 0.9% to 104.84 yen despite expectations that the Bank of Japan will ease later this week as investors grow increasingly sceptical about the impact of further stimulus.
The most-active rubber contract on the Shanghai Futures Exchange for September delivery fell 75 yuan to end at 11,145 yuan (US$1,669.06) per tonne.
Oil prices rebounded from over three-month lows on Tuesday, lifted by a drop in the dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls.
“Lingering concerns over slowing demand in China also added to pressure,” Tazawa said.
“Since the TOCOM benchmark’s gains have been capped at around 165 yen since early June, I expect the market to remain in a narrow range for a while,” he added.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 128.5 US cents per kg, down 2.8 cent.
(US$1 = 104.3100 yen)
(US$1 = 6.6774 Chinese yuan)
