NEGOTIATOR’S TAKE: Rubber is down 20% over the last 4 weeks: time to renegotiate tires and other rubber-based products.
05.25.16 – Tokyo
Benchmark Tokyo rubber futures ended higher on Friday, erasing earlier losses on the back of a weaker yen against the dollar, but posted a drop of 5.8 percent for the week. Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, declined for a fourth straight week, and have fallen 20.5 percent from a near nine-month high of above 205 yen on April 27 amid worries about waning demand in the world’s top consumer China, brokers said.
The Tokyo Commodity Exchange rubber contract for October delivery finished 1.3 yen higher at 163.1 yen per kg, after falling more than 2 percent to 158 yen earlier, the lowest since March 2.
“TOCOM and Shanghai have fallen on each other’s declines recently,” said a source with a Tokyo-based broker. “With the decline in Shanghai futures continuing, rubber futures may come under further pressure next week.” The US dollar edged higher to around 110.12 yen in the afternoon as investors awaken to the risk of a hike in US interest rates as early as next month.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 155 yuan to finish at 10,860 yuan per tonne. The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 128 US cents per kg, down 1.5 cents.