TOCOM hits 4-wk low on plunging Shanghai prices amid China worries

Benchmark Tokyo rubber futures fell for a fifth straight session to a fresh 4-week low on Monday as disappointing China trade data sent Shanghai futures plunging, which triggered sell-offs in Tokyo, dealers said.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, got off to a positive start, backed by stronger oil prices and a softer yen against the US dollar, but surrendered earlier gains after Shanghai rubber came under pressure.

The TOCOM rubber contract for October delivery <0#2JRU:> finished 2.8 yen, or 1.5%, lower at 180.7 yen (US$1.67) per kg, after touching a low of 180.0 yen, the lowest since April 11.

"The Tokyo market lost ground as Shanghai futures took a beating from a weak Chinese trade data," said Toshitaka Tazawa, analyst at Fujitomi Co.

China's exports and imports fell more than expected in April, underlining weak demand at home and abroad and cooling hopes of a recovery in the world's second-largest economy.

The most-active rubber contract on the Shanghai futures exchange for September delivery tumbled 505 yuan to finish at 11,785 yuan (US$1,811.68) per tonne.

On the positive side, oil rallied on Monday as Canada's most destructive wildfire in recent memory knocked out over a million barrels in daily production capacity, but caution among investors prevented a return to late April's 2016 price highs.

The dollar hit a ten-day high against the yen on Monday after Japan's finance minister said Tokyo was ready to intervene in the market if currency moves were volatile enough to hurt the country's trade and economy.

Still, the TOCOM benchmark is expected to test an April low of 175.6 yen given the weak market sentiment, Tazawa said.

"If it falls below that level, the market may slide below 170 yen," Tazawa said.

The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 145.1 US cents per kg, down 2.2 cent.