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Sunday, November 28, 2021

TOCOM rubber falls on renewed worries of Sino-US trade tension

BEIJING (May 30): Benchmark Tokyo rubber futures fell on Wednesday on Shanghai losses, amid revived fear of a trade war between the world’s top two economies.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for rubber prices in Southeast Asia, were also pressured by high rubber inventories and a sluggish demand expected to be further limited ahead of a regional summit held in Qingdao, a major production hub of tyre.

“The fundamentals are still quite weak and there is the overnight news on renewed Sino-US trade tension, which both weighed on rubber prices,” said Zhao Wenting, analyst with Dongwu Futures.

“There will be a concentrated releases of supplies in June. Tyre factories are expected to cut production ahead of and during the Shanghai Cooperation Organisation (SCO) Summit,” Zhao said.

The United States said on Tuesday that it still held the threat of imposing tariffs on US$50 billion of imports from China. In response, China said Beijing was ready to fight back if Washington was looking to ignite a trade war.

The Tokyo Commodity Exchange rubber contract for November delivery finished 2.3 yen (US$0.0212) lower at 192.0 yen per kg.

The most-active rubber contract on the Shanghai futures exchange for September delivery fell 265 yuan (US$41.23) to finish at 11,655 yuan per tonne.

The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 143.4 US cents per kg, down 0.9 cent.

The SCO summit, which runs from June 9-10, will attempt to create new agreements on security issues such as counter-terrorism and drug smuggling among the seven-member bloc.

(US$1 = 6.4281 Chinese yuan)
(US$1 = 108.7400 yen)

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