TOKYO, May 29 (Reuters) – Tokyo rubber futures reversed early gains to close lower on Wednesday, coming under pressure from a sell-off in Shanghai futures amid concerns about a slowdown in growth in China, the world’s biggest rubber consumer.
The International Monetary Fund on Wednesday cut its growth forecast for China this year to 7.75 percent from 8 percent, citing a weak world economy and exports, adding to concerns that the world’s second-largest economy is losing momentum.
“Industrial commodities are out of favour in China because the country’s growth looks gloomy,” said Gu Jiong, an analyst at Yutaka Shoji Co.
“In the past, whenever external economic estimates showed a bearish economic outlook, Beijing used to make comments to counteract and say there was nothing to worry about. But that’s no longer the case now,” he said.
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The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for November delivery settled down 1.3 yen at 267.4 yen ($2.6).
Early buying, helped by firmer equity prices, had run out of steam after touching a high of 274.8 yen, and the Tokyo market came under pressure from a fall in Shanghai futures prices to and below a key 190,000 level.
The absence of investors betting on a long-term trend has increased price volatility in the past few days. The TOCOM market hit a three-week low of 264.1 yen on Monday.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 370 yuan to finish at 18,780 yuan ($3,100) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 245 U.S. cents per kg, down 4.1 cents.
($1=6.1215 Chinese yuan)
($1=102.3500 Japanese yen)
(Reporting by Risa Maeda; Editing by Clarence Fernandez)
Source: Reuters
