May 12 Benchmark Tokyo rubber futures edged lower on Tuesday, after touching a 13-month high, as investors took profits following a drop in Shanghai futures and on worries that weak vehicle sales in China, the world’s biggest buyer, will slow rubber demand.
The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery <0#2JRU:> finished 0.6 yen, or 0.3 %, lower at 223.9 yen (US$1.87) per kg.
It earlier touched 226.8 yen, the highest intra-day level since April 9, 2014, after breaking this year’s high of 226.7 yen hit on March 2.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 55 yuan to finish at 14,630 yuan (US$2,356.41) per tonne.
Behind the fall was slack sales of automobiles in China, the world’s largest auto market, dealers said.
Vehicle sales in China dropped 0.5 % year-on-year in April as a slowing economy continues to weigh on domestic car demand, the China Association of Automobile Manufacturers (CAAM) said on Monday.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have gained about 15 % since their recent lows in early April.
“The TOCOM market has been dominated by speculators since early April, rather than fundamental factors,” said Hiroyuki Kikukawa, general manager at Nihon Unicom Inc.
“The rubber prices usually come under pressure this time of the year due to higher supplies after wintering season in top producer countries, but they have been buoyed by buys from Chinese funds which had benefited from a rise in Chinese stock prices,” he said.
“The prices may face a sharp downturn if these funds start to pull their money away,” he added.
The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 151.6 U.S. cents per kg, down 1.9 cent.
(US$1 = 120.0100 yen) (US$1 = 6.2086 Chinese yuan) – Reuters