TOKYO, May 24 (Reuters) – Benchmark Tokyo rubber futures fell to a two-week low on Friday, extending the previous day’s steep decline, and lost almost 6 percent on the week after weak manufacturing data from China and the United States spurred worries about demand.
Data on Thursday showed Chinese factory activity declined in May for the first time in seven months and U.S. manufacturing grew at its slowest pace since October, suggesting it may be a while before the global economy starts to pick up steam.
There are also lingering concerns about oversupply ahead of a seasonal rise in supply in coming months.
Thailand, the world’s biggest rubber producer and exporter, said on Thursday that it would not extend restrictions on exporting the commodity when its solo effort expires on May 31.
The benchmark Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery settled 1.5 percent lower at 270.8 yen per kg, after bouncing back from an intraday low of 265.9 yen. That was its lowest since May 7.
For the week, the October contract lost 5.9 percent, the biggest weekly decline in five. A quick reversal in the dollar’s rally versus the yen earlier this week to a 4-1/2-year high weighed on prices.
A stronger yen in theory depreciates yen-denominated TOCOM prices and often invites selling.
Satoru Yoshida, a commodity analyst at Dot Commodity, said late bargain-hunting after rubber prices fell below the psychologically important level of 270 yen was encouraging and underlined a bullish mood in the Tokyo market.
“I don’t think a sell-off this time would last long because equity markets attracted late buying for bargain-hunting and so did the rubber market,” Yoshida said.
Japan’s Nikkei share average ended 0.9 percent higher in turbulent trade on Friday following the previous day’s 7.3 percent dive.
The most-active rubber contract on the Shanghai futures exchange fell 410 yuan, or 2.1 percent, to 19,360 yuan per tonne.
The front-month June rubber contract on Singapore’s SICOM futures exchange was last traded at 247.4 U.S. cents per kg, down 10.2 cents.
Markets in Thailand, the world’s biggest rubber producer, were closed on Friday for a public holiday. (Reporting by Risa Maeda)
Source: Reuters
