Asian Rubber Futures Decline As China Manufacturing Slows


24 March 2014, 17:55 SEAST


Asian rubber futures settled lower Monday because of fears about demand prospects from China after another set of weak economic data. China is the world’s largest consumer and importer of natural rubber.


Sentiment was hit as preliminary HSBC China manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to an eight-month low of 48.1 in March, compared with a final reading of 48.5 in February, HSBC Holdings PLC said Monday.


A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.


Benchmark August natural rubber on the Tokyo Commodity Exchange settled 1.2% lower at Y232.0 a kilogram with any support from the weak Japanese yen offset by the concerns from China.


“We expect worries of a Chinese economic slowdown to worsen going forward and provide a bearish undertone to the rubber market,” said Phillip Futures Singapore in a note.


The brokerage added that although the yen is generally weaker–which is supportive for Tocom–an abundance in rubber supply is negative for the market and would cap any gains on the Japanese bourses.


Meanwhile, International Rubber Consortium Chief Executive Yium Tavarolit said in his weekly note that tight supply in the major producing regions of Thailand, Indonesia and Malaysia was lending support to prices in the physical market, so the weakness in rubber futures was “weird.”