TOKYO (July 7): Benchmark Tokyo rubber futures sank to their lowest in nearly three weeks on Monday as lingering concerns over high inventory and lower crude oil prices battered sentiment for the soft commodity, dealers said.
The Tokyo Commodity Exchange rubber contract for December delivery fell 8.7 yen, or 4.1 percent, to settle at 203.2 yen ($1.99) per kg. It had earlier fallen to as low as 202.9 yen, the lowest since June 18.
Tokyo futures, which set the tone for physical prices, rallied to their highest in two months at 220 yen a kg in late June, but have since struggled to sustain gains.
“A wave of selling was triggered after the benchmark fell below 210 yen level. Some investors were unwinding their buy positions while some were trying to add fresh sell positions,” said Toshitaka Tazawa, an analyst with Fujitomi Co.
“With high inventory and slack demand, investors’ sentiment is pretty bearish. We may not see a fresh buying spree until the benchmark drops below 200 yen.”
While total rubber stocks in China’s bonded warehouses Qingdao have slipped to a five-month low, partly on reduced demand for the commodity as a loan collateral, the country still has nearly 150,000 tonnes of rubber in Shanghai.
China is the world’s largest user of natural rubber, accounting for about 36 percent of global consumption.
The most-active rubber contract on the Shanghai futures exchange for September delivery slipped 720 yuan to finish at 14,000 yuan ($2,300) per tonne. It briefly touched 13,980 yuan, the lowest in about a month, towards the end of trade.
Sluggish crude oil prices were also behind the bearish tone in the rubber markets, dealers said.
Brent crude hit a more than three-week low near $111 a barrel amid expectations of a rise in supplies as Libya gears up to resume oil exports from two ports that have been closed for nearly a year.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery was last traded at 166.40 U.S. cents per kg, down 6.7 cents.
($1 = 102.0900 Japanese Yen)
($1 = 6.1999 Chinese Yuan Renminbi)