Asian rubber settled lower Thursday snapping a four-day rising streak amid long liquidation and profit-taking following concerns China may tighten liquidity to rein in inflation, said trade participants.
However, physical prices of the Thai USS3 raw material rose above THB90 a kilogram, with unseasonal rains affecting market arrivals in the three central markets.
The benchmark June RSS3 contract on the Tokyo Commodity Exchange settled Y1.4 lower at Y288.9/kg, off an intraday high of Y297.2, a level not seen since late September 2008.
Prices eased further during the night session, with the June contract ending at Y288.2. Night session prices aren't included in intraday trading.
Initially prices rose due to strong fundamentals including tight supply in Thailand, the world's largest producer, due to rains and strong demand in China, the largest consumer.
"There is a strong demand for natural rubber in China as many want to take advantage of the sharp cut in import duty," said an exporter in Singapore. He said many sellers in physical market are hedging positions on futures exchanges.
However, the gains couldn't be sustained as several commodities tumbled on China's plans to curb liquidity.
"The rubber market was ripe for a correction and China's fiscal moves were taken as a signal to liquidate positions," said a Singapore-based exporter.
Prices fell across the commodities complex, including gold, crude oil, soyoil, palm oil and grains and natural rubber followed suit.
In other news, the average daily trading volume in RSS3 rubber futures on the Tocom rose 24% on month in December, to 12,484 contracts, as prices moved to their highest levels in more than a year -- but daily volume averaged less than half of December 2008 levels.
The benchmark May contract on the Shanghai Futures Exchange settled 0.7% higher at CNY25,100 a metric ton but off the intraday high of CNY25,740/ton.
The benchmark August contract on the Agricultural Futures Exchange of Thailand settled THB0.75 lower at THB101.50/kg.
Asian physical rubber prices were higher and many grades were offered above $3,000/ton.
"The market is on an upswing because of bullish futures and strong fundamentals," a Singapore-based trading executive said.
He said physical prices could have increased further but futures markets eased on profit-taking during the afternoon session.
Tong Thai Nabon has sold 600 tons RSS3 rubber at $3,020/ton, free on board for January shipment, a Thailand-based trader said.
(Source: irco.biz)
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