Asian rubber futures settled 3.6% lower Thursday after hitting limit-down during intraday trading as investors closed out long positions to reduce losses.
TSR20 again traded at a premium to RSS3 grade on the Singapore Commodity Exchange due to tight supply in Indonesia.
The benchmark May RSS3 contract on the Tokyo Commodity Exchange settled Y9.1 lower at Y243.8 a kilogram after hitting limit-down at Y242.9/kg. Tocom's first daily trading limit is Y10/kg above or below the previous day's close.
Prices recovered marginally during the night session, with the May contract ending at Y244.6/kg. Night session prices aren't included in intraday trading.
Some traders were taken off guard by the decline, which marked a sharp reversal of a recent uptrend that saw the benchmark Tocom contract reach a 14-month high Friday as rubber tracked other commodities, helped by its own fundamentals.
"As the market continued to tumble, many (traders) panicked and quickly closed their positions to cut losses," said an executive at a Japan-based commodities brokerage.
The contract fell 7.6% between Friday night's peak of Y264.7/kg and the most recently traded price.
"Rubber is following gold, platinum and crude oil downhill--but the decline isn't as steep as in the case of other commodities," noted a broker in Tokyo.
Gold prices have declined by more than 8% since hitting record highs above $1,225/oz last week.
Light, sweet crude for January delivery settled $1.95, or 2.7%, lower at $70.67/barrel Wednesday on the New York Mercantile Exchange, the contract's lowest level since Oct 7. It was steady in electronic trading during Asian hours.
There could have been further price declines in rubber but for physical buying, the broker said.
"Buyers tend to come in when price is down," he noted.
Most traders put immediate technical support at Y244/kg, then Y230-Y235.
The benchmark March contract on the Shanghai Futures Exchange settled CNY330 lower at CNY21,500/ton.
Asian physical prices were lower, tracking futures prices and weak demand. Most buyers were on the sidelines, expecting further declines, said an exporter in Singapore. Trading was also thin because Thailand closed for public holiday, he added.
Offer prices were in wide range, but limited buyers meant a lack of clarity. In China, consumers prefer to make cheaper purchases from bonded warehouses, where Indonesia's SIR20 is available at $2,650/ton, said another trader.
(Source: irco.biz)
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