TOKYO: Benchmark Tokyo rubber futures fell to a two-week low on Tuesday as plunging oil prices weighed on prices of other commodities and as the yen’s rise to a one-month high added to selling pressure.
Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, have dropped more than 4 percent so far this year.
The Tokyo Commodity Exchange rubber contract for June delivery finished at 203.8 yen ($2) per kg, down 1.3 percent, or 2.7 yen. It earlier fell to a low of 203.1 yen, the lowest since Dec. 26.
“Weaker oil prices and the yen’s gain prompted sell orders from early trade,” said Jiong Gu, analyst at Yutaka Shoji Co.
Oil prices continued their rout on Tuesday with Brent crude and U.S. WTI both falling to their lowest in almost six years as a big OPEC producer stood by the group’s decision not to cut output to tackle a glut in the market.
The yen hit a one-month high against the dollar on Tuesday, buoyed by steady demand for safe-haven assets against a backdrop of plunging oil prices that has triggered worries about global growth.
“Speculations that rubber supply would be affected by the flood of rubber producing regions in Malaysia and Thailand has subdued, which also added pressure on the prices,” Gu said.
Flooding across parts of major rubber and palm oil producer Malaysia due to monsoon rains has cut production in December, a senior government official said last month, squeezing supply and lifting prices.
China’s December trade data beat expectations, as demand from a stronger U.S. economy helped offset weakness in Europe and Japan while Chinese bargain-shopping in commodities markets put a floor under sliding imports.
But the solid data did not support the market.
The most-active rubber contract on the Shanghai futures exchange for May delivery fell 420 yuan to finish at 12,920 yuan ($2,085) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 141.2 U.S. cents per kg, down 3.3 cent.
– Reuters
