TOKYO, March 11 (Reuters) – Benchmark Tokyo rubber futures extended declines on Wednesday, but pared most of the 2.5 percent fall in early trade, supported by firm Shanghai futures.
Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, came under pressure amid worries over Chinese demand, though some regions in Southeast Asia have entered a wintering period, when rubber trees become drier, resulting in lower yields.
Rubber growers in No.2 producer Indonesia held off from selling big volumes this week amid softer prices as Chinese buyers sought cheaper cargoes elsewhere, traders said.
A slowing economy is hurting industrial demand in China, the world’s top rubber importer, with the government targeting growth this year of about 7 percent, the lowest in 25 years.
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“The market fundamentals were weak and lacked the strength to rise, with prices for general purpose rubber on the decline,” said a source with a Tokyo-based dealer.
The Tokyo Commodity Exchange rubber contract for August delivery finished 0.2 yen lower at 208.5 yen per kg. It hit its lowest since Feb. 3 of 203.5 yen in early trade after sharp global declines in crude prices.
The most-active rubber contract on the Shanghai futures exchange for September delivery rose 25 yuan to finish at 12,705 yuan per tonne.
Automobile sales in China totalled 1.59 million vehicles in February, down 0.2 percent from a year earlier, an industry association said on Tuesday.
The U.S. dollar was quoted around 121.36 yen, off a nearly eight-year high of 122.04 yen hit on Tuesday.
The front-month rubber contract on Singapore’s SICOM exchange for April delivery last traded at 141.10 U.S. cents per kg, down 0.3 cent. (Reporting by Osamu Tsukimori; Editing by Gopakumar Warrier)
– Reuters
