Friday 29 Mar 2024
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TOKYO (April 12): Benchmark Tokyo rubber futures tumbled to near 5-month lows on Wednesday, as a sharp slide in Shanghai futures amid concerns over a supply glut in China added to pressure, while rising geopolitical tensions also weighed on sentiment.

"Shanghai rubber market has come under pressure due to fears about oversupply in China," said Toshitaka Tazawa, analyst at Fujitomi Co.

"Weakening Shanghai market led the way and hurt Tokyo prices," he said.

The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery finished 9.6 yen, or 4.2%, lower at 219.7 yen (US$2.00) per kg, after hitting the lowest since Nov 21 of 218.0 yen earlier in the session.

The most-active rubber contract on the Shanghai futures exchange for September delivery slipped 700 yuan to finish at 14,770 yuan (US$2,143) per tonne. It earlier touched a low of 14,660 yuan, the weakest since Oct 21.

The front-month rubber contract on Singapore's SICOM exchange for May delivery last traded at 156.1 US cents per kg, down 8.7 US cent.

Spreading geopolitical concerns about Syria and North Korea also dragged down the market, dealers said.

US President Donald Trump's spokesman on Tuesday increased pressure on Russia over a chemical weapons attack in Syria last week, calling Moscow isolated and saying it was trying to shift blame away from Syrian President Bashar al-Assad.

Trump said in a note on Twitter on Tuesday that he told China's President Xi Jinping that Beijing would get a better trade deal with Washington if it helped solve the US problem with North Korea.

The yen hit five-month highs against the dollar on Wednesday, as simmering geopolitical tensions checked risk appetite and put the safe-haven Japanese currency in favour. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.

(US$1 = 109.7400 yen)
(US$1 = 6.8911 Chinese yuan)

 

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