Rubber TOCOM dives to fresh 7-year low amid nerves on China

Benchmark Tokyo rubber futures fell to a fresh 7-year low on Wednesday as weak economic data in top buyer China sparked a flurry of sells and the yen jumped to a near 3-month high against the dollar after a possible nuclear test in North Korea.

The Tokyo Commodity Exchange (TOCOM) rubber contract for June delivery <0#2JRU:> extended losses into a third day, ending 2.4 yen, or 1.6%, lower at 148.2 yen per kg. It earlier dipped to a low of 147.5 yen, the lowest since March 25, 2009.

"On top of stronger yen, China's slack economic data led shares in Tokyo to slide, which dampened already-languished market sentiment," said Toshitaka Tazawa, analyst at Fujitomi Co.

Activity in China's services sector expanded at its slowest rate in 17 months in December, a private survey showed on Wednesday, in a further indication that the world's second-largest economy may be losing steam.

The yen jumped as much as 0.6% to 118.35 yen to the dollar, its highest level since Oct. 15 as investors sought shelter in low-risk assets after weak economic news from China and a possible nuclear test in North Korea.

Japanese stocks fell on Wednesday after a private survey stoked fears that China's economy may be losing steam while North Korea's claims that it tested a hydrogen bomb introduced fresh geopolitical uncertainty that blunted risk appetite.

On the plus-side, China stocks bounced on Wednesday on hopes that regulators will extend a ban on share sales by major stakeholders as Beijing scrambled to avert a potential repeat of last summer's market crash.

"It seems there is no real support for the rubber prices. We may see the prices falling further to below 140 yen as they did in March 2009," Tazawa said.

TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, hit an intra-day low of 127.8 yen in early March 2009.

Also, the TOCOM market paid little attention to the news that automakers set a new US sales record for 2015 even as December sales fell short of expectations, and most forecasters said sales should rise to another record this year.

The most-active rubber contract on the Shanghai futures exchange for May delivery fell 105 yuan to finish at 10,070 yuan per tonne.

The front-month rubber contract on Singapore's SICOM exchange for February delivery last traded at 109.3 US cents per kg, down 1.2 US cent.