Asian Rubber Slumps; Intervention Not Yet Under Consideration


21 April 2014, 17:55 SEAST


Asian rubber slumped Monday, with the benchmark contract in Tokyo falling to fresh four-and-a-half year lows as investors rushed to cut their losses in a second straight day of selloff.


Benchmark September natural rubber on the Tokyo Commodity Exchange settled 2.4% lower as Shanghai fell as much as 3.7% intraday before settling 2.8% lower.


Phillip Futures Singapore analyst Vanessa Tan said in a note that Tocom rubber was overshadowed by concerns over the slowing Chinese economy and weaker-than-expected Japanese trade data.


The Japanese Ministry of Finance released data Monday morning showing a trade deficit of 1.45 trillion yen in March, the largest ever for the month and marking a record 21 straight months of shortfalls. That was much worse than the median forecast for Y1.07 trillion deficit in a survey of economists by The Wall Street Journal and the Nikkei.


International Rubber Consortium Chief Executive Yium Tavarolit said the major producing countries of Thailand, Indonesia and Malaysia have discussed the selloff in rubber futures, which they are attributing to global macroeconomic uncertainties.


“At this time, we are not considering any market intervention as we have to accept current market fundamentals,” said Mr. Yium. He added that member countries are urging producers to manage production and sales in the current market. He also warned of El Nino concerns later this year that might affect yields.


September Tocom rubber extended losses to close Y1.8 lower at Y199.6/kg.


“It’s a scary market out there,” said a Singapore-based spot rubber dealer. He added there weren’t many trades done Monday as buyers are out bargain-hunting, but to no avail, as producers were unwilling to sell at such levels amid the low-production season.