TOKYO (May 8): Benchmark Tokyo rubber futures tumbled about 7% on Monday, weighed down by a plunge in Shanghai futures to a near eight-month low amid lingering concerns over supply glut.
“Bearish market trend in Shanghai led the way,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Weak sentiment is likely to continue both in Tokyo and Shanghai due to sluggish oil prices, softer automobile sales in the United States and nearing an end of dry wintering season in producing countries in Southeast Asia,” he said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished down 15.1 yen, or 6.8%, at 206.6 yen (US$1.84) per kg, marking its biggest one-day fall since February. Earlier in the session, it hit 205.1 yen, the lowest since April 20.
Japanese markets were closed from Wednesday to Friday due to a string of holidays called the “Golden Week”.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 240 yuan to finish at 13,565 yuan (US$1,965) per tonne, after falling to as low as 13,520 yuan, the lowest since Sept 14.
Oil prices hit their lowest since November last week on fears over a persistent glut although they rose on Monday as Saudi Arabia’s energy minister said an OPEC-led production cut scheduled to end in June would likely be extended to cover all of the year, or even into 2018.
Last week, General Motors Co, Ford Motor Co and Toyota Motor Corp, the top three automakers in the United States, posted lower new vehicle sales in April in a fresh sign the long boom cycle for the auto industry is losing steam.
Rubber is tapped year round, but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand, the world’s biggest rubber producer, lasts from February to around May.
“If the TOCOM benchmark slips below a key 200 yen level, selling may get accelerated,” Kikukawa said.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 146.5 US cents per kg, down 2.4 US cents.
(US$1 = 112.5400 yen)
(US$1 = 6.9032 Chinese yuan)
