Asian rubber settled lower Wednesday on speculative selling and profit-taking amid lower crude oil and China's buying from neighboring Japan as tiremakers tried to cut costs, said trade participants.
However, prices bounced during the night session on the Tokyo Commodity Exchange, hitting a fresh 15-month high due to fresh buying from speculators, who took leads from limited supplies in major growing regions.
The physical prices of Thai USS3 raw material were higher above THB94/kg as demand exceeded supply in all the three central markets.
The benchmark June RSS3 contract on the Tokyo Commodity Exchange settled Y3.3 lower at Y296.6/kg after almost hitting the daily lower limit, reaching an intraday low of Y290.4.
It is only the second time so far this year that Tocom rubber futures settled lower than the previous close.
Still, prices recovered smartly during the night session and the June contract ended at Y303, a level not seen since September 2008. Night session prices aren't included in intraday trading.
"The market has been overbought for quite some time now due to successive rises in prices almost daily this year," said a broker in Tokyo.
He said prices breaking above Y300/kg Tuesday prompted profit-taking.
Traders said fundamentals are strong but technical selling may ensure a downward correction at regular intervals.
Rubber futures in Thailand shrugged off volatility in the Tocom market as investors took leads from the domestic fundamentals, which are strong due to tight supply of raw material.
The benchmark August contract on the Agricultural Futures Exchange of Thailand settled unchanged at THB105.90/kg.
Japan's natural rubber inventories have declined sharply in recent months not only due to local consumption but also because some of the existing stocks have been re-sold to China, trading executives said Wednesday.
They said traders in Japan import rubber from Thailand, Malaysia and Indonesia, and are selling some to China, with prices hovering around 15-month highs.
"Demand for rubber is much stronger in China, so many traders keeping an eye on profits have shipped out inventories there," said an Tokyo-based commodities brokerage.
Japan's local demand and exports to China have resulted in a need to rebuild inventories and pushed up imports of natural rubber to meet immediate needs.
Japan's natural rubber imports rose 2.8% in November, probably because of the sharp drawdown of inventories seen in the previous few months.
The increase follows a 19% rise in imports during October.
The benchmark May contract on the Shanghai Futures Exchange settled 1.7% lower at CNY25,445/ton. China is world's largest consumer of rubber.
Asian physical rubber prices eased slightly as many traders kept to the sidelines due to volatility in futures markets.
"We didn't make any offers today as prices are likely to move up further," said an executive at a Thailand-based trading company.
Malaysia's SMR20 grade compound rubber was sold at $3,100/ton, CIF, for early February shipment to China.
(Source: irco.biz)
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