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Tuesday, January 25, 2022

China demand worries hurt rubber; TOCOM rubber faces resistance at 250 yen/kg

SINGAPORE, July 1 (Reuters) – Slowing economic growth in main rubber consumer China could keep Tokyo futures capped this week, dealers said on Monday.

High refining margins will highlight the sugar market, where Thai millers have been producing more whites to meet demand ahead of the Muslim fasting month of Ramadan later in July. In cocoa, butter ratios will hold at a four-year peak.

A weaker yen initially sent the most active December rubber contract on Tokyo Commodity Exchange to a high of 239 yen a kg, its strongest since June 21. The contract later dropped back as concerns about China resurfaced.

China’s official purchasing managers’ index slipped to 50.1 in June from 50.8 in May, a survey showed on Monday, reinforcing worries about tepid growth in the second quarter.

“I can’t expect to see much demand from China,” said Gu Jiong, an analyst at Yutaka Shoji Co in Tokyo, who pegged resistance at 250 yen a kg.

“But I heard that stocks in Qingdao are decreasing. It can still support the price in this low level,” said Gu.

Inventory in China’s bonded warehouses have been estimated by dealers at 300,000 to 350,000 tonnes. Stocks at Qingdao makes up the bulk of China’s rubber stocks, but the quantity is not disclosed to the public.

Source: Reuters

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