TOKYO (July 28): Benchmark Tokyo rubber futures dropped to a nearly three-week low on Tuesday, extending losses into a third straight session, on worries about volatile Chinese equity markets while slowing demand in China, the world’s top buyer of the soft commodity, also weighed on sentiment.
The Tokyo Commodity Exchange (TOCOM) rubber contract for new January delivery <0#2JRU:> fell 1.1 yen, or 0.5 percent, to close at 202.6 yen ($1.64) per kg compared with its opening price of 203.7 yen.
It had earlier fallen to as low as 199.5 yen, the lowest since July 9.
“TOCOM prices regained some ground later in the day as China’s stock markets recovered from their lows and Shanghai rubber futures also shed some of their earlier losses,” said Hiroyuki Kikukawa, general manager atNihon Unicom Inc.
Chinese stocks ended lower in a volatile session on Tuesday, even as Beijing pledged to lend further support after stocks sank 8 percent in the previous session, raising concerns about financial stability in the world’s second-biggest economy.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended 0.2 percent lower while the Shanghai Composite Index lost 1.7 percent after both indexes had lurched between losses as deep as 5 percent and gains of more than 1 percent.
The most-active rubber contract on the Shanghai Futures Exchange for January delivery fell 45 yuan to finish at 12,660 yuan ($2,039.21) per tonne, recovering from a low of 12,355 yuan.
“All eyes were on Chinese share prices in the wake of a plunge on Monday,” Kikukawa said.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have been in the doldrums, weighed down by concerns about slowing economic growth in China.
“Only support was some worries about an impact from drought in rubber producing countries such as Thailand and Vietnam,” Kikukawa added.
In Thailand, Southeast Asia’s second-largest economy, the wet season is underway, but it was contending with drought conditions in seven out of 67 provinces last week, according to the National Disaster Warning Center.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 138.8 U.S. cents per kg, down 1.3 cent.
($1 = 123.6300 yen)
($1 = 6.2083 Chinese yuan)