[28 Jan] Asian Rubber Settles Lower As Japan's Inventories Surge 7.8%

Asian rubber futures settled lower Wednesday for the fourth successive trading day, slipping to a four-week low tracking a sharp rise in Japan's natural rubber inventories and weaker crude oil, said trade participants.

Concerns over a U.S proposal to restrict proprietary trading by banks, which can affect liquidity in commodity derivatives, continued to rattle natural rubber investors across all major Asian bourses in Tokyo, Singapore, Bangkok and Shanghai.

The new benchmark July contract on the Tocom settled Y8.0 lower at Y278.2 a kilogram, close to the intraday low of Y276.5/kg.

Prices fell further during the night session, with the July contract hitting an intra-session low of Y275.1/kg, a level not reached this year. Night session prices aren't included in intraday trading.

Many investors, instead of rolling over long positions to July from June, are liquidating them, says executive at Tokyo-based commodities brokerage.

Natural rubber stocks in Japan as of Jan. 20 stood at 6,877 metric tons, up 7.8% from 6,380 tons Jan. 10, according to data issued Wednesday by the Rubber Trade Association of Japan.

Japan's natural rubber stocks had declined to historically low levels of 3,902 tons Nov. 10 and are still 32% lower than end-May 2009.

However, a recent rise in stocks prompted fresh selling pressure on Tocom rubber futures.

"Higher stocks create enough leeway for traders to ship out more volumes to China," said a Tokyo-based trading executive.

He said this gives an option to tire makers in China to meet raw material requirements from neighboring Japan at a discount instead of directly buying costlier cargoes from producing countries.

Traders in Japan import rubber from Thailand, Malaysia and Indonesia and sell some existing inventories to China to make a profit, as prices are hovering around 15-month highs.

The benchmark May contract on the Shanghai Futures Exchange settled CNY510 lower at CNY23,955/ton.

The benchmark August contract on the Agricultural Futures Exchange of Thailand settled THB2.60 lower at THB99.30/kg.

Asian physical rubber prices were lower as futures markets tumbled again but buying was limited due to price volatility.

"Buyers are hesitant in making large purchases as they fear prices may ease further," said a Singapore-based trader.

Thailand's RSS3 rubber, which was being offered around $3,200/ton, free on board for March shipment a few days back, is now quoted at $3,050/ton or lower.

(Source: irco.biz)