Tokyo rubber loses ground

Tokyo rubber futures fell for the second day in a row on Thursday, breaching a closely watched technical level, as easing concerns over supply tightness in producing countries induced additional speculative selling.
The weak price of rubber in major producing countries this week also weighed on the Tokyo Commodity Exchange, but some traders said falling domestic inventories could provide some support.
Benchmark January Tokyo Commodity Exchange rubber futures closed at 252.4 yen per kg, down 3.3 yen or more than one percent, from Wednesday.
"Tokyo prices are still high relative to Thailand prices, so they could fall further possibly by another 10 yen from here," said Hisaaki Tasaka, market analyst at Ace Koeki Co Ltd.
"But I'm a bit worried about domestic stocks which are below 10,000 tonnes. Concerns over falling stocks could underpin prices," Tasaka said. Last week's industry data showed domestic inventories fell below the 10,000 tonne level as of the end of July, for the first time since January. Japanese rubber stocks have been on a downtrend since they reached this year's peak of 18,315 tonnes on May 20.
"We are hearing that there are more physical supplies, but considering that stocks are falling continuously I don't think there are enough supplies arriving to end-users," Tasaka said.
The key TOCOM rubber contract fell as far as 251.0 yen a kg on Thursday the lowest for a benchmark contract since April 28. The January contract also dropped below the 200-day moving average of 253.4 yen. It dipped below a 200-day MA for the first since May 2005. The key contract has fallen by about 5 percent since the start of the week.
Traders in producing countries were keeping a close eye on TOCOM, particularly on whether the benchmark would fall below a key 250-yen level, as some said this could trigger further declines in physical prices. In Thailand, benchmark RSS3 rubber sheet for October shipment was assessed at below $2.15 a kg free on board (FOB), compared with about $2.15 the previous day.
Buyers were expected to emerge at around $2.10 for tyre-grade Standard Thai Rubber, or STR20 block, although it was unclear if there would be any sellers at that level. This compares with Wednesday when STR20 was assessed at about $2.15.