TOCOM rubber sinks to 6-1/2-month low amid commodities slump

Benchmark Tokyo rubber futures extended its losses on Tuesday, sinking to a 6-1/2-month low, as investors continued to sell after oil and copper prices slumped overnight amid growing worries about the world’s top buyer China, dealer said.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, have lost more than 20 percent since hitting a 16-month high in early June, reflecting concerns about China’s slowing demand and choppy stock markets.

The TOCOM rubber contract for January delivery <0#2JRU:> finished 2.9 yen, or 1.5 percent, lower at 194.5 yen ($1.57) per kg after hitting a low of 192.4 yen, the lowest since Jan. 21.

“We saw continued sell orders from funds in the wake of an overnight plunge in global commodities prices such as oil and copper,” said a Tokyo-based dealer who declined to be named.

Oil prices lurched 5 percent lower on Monday to their lowest since January as weak factory activity in China deepened a commodity-wide rout although the prices edged up on Tuesday.

Copper prices hit six-year lows on Monday as manufacturing data from top consumer China and a slide in Shanghai equities reinforced concerns about the country’s economic growth prospects. But they steadied on Tuesday as the dollar stalled.

“There were buys for hedging from Asian producers before the benchmark fell below 200 yen, but the market is now dominated by selling pressure due to lingering worries about China,” he said.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 280 yuan to finish at 12,290 yuan ($1,979.51) per tonne, retreating from a low of 11,850 yuan after a recovery in China’s stock market.

China stocks rose sharply on Tuesday after authorities there announced new measures to curb short-selling, as part of their raft of steps to support share markets that lost more than 30 percent of their value after a June peak.

The front-month rubber contract on Singapore’s SICOM exchange for September delivery last traded at 136.7 U.S. cents per kg, down 0.7 cent.