Prices of tyre-grade rubber dropped in Asia on Monday as selling persisted in Japanese futures, but tight supply in main producer Thailand may offer some support in coming days.
The most active sixth month TOCOM rubber contract, August, closed 6.8 yen per kg lower at 254.60 yen ($2.18). It had risen as high as 267.5 yen on Friday, the highest since February 10, on fund buying.
Dealers said Tokyo futures, which set the trend for the regional physical market, were overbought and could undergo more correction. That prompted many buyers to stay on the sidelines, although sellers reported purchases from main consumer China last week. "Prices have come down bit because of Tokyo but latex is unchanged. I don't know why (the price of) latex is strong this year but maybe wintering is part of the reason," said a dealer in Thailand's southern city of Hat Yai.
During the wintering season, rubber trees shed leaves and yields are low. Thai benchmark RSS3 rubber sheet for April shipment fell to between $1.12 and $2.13 a kg, free on board, from $2.18 a kg on Friday.
Tyre-grade Standard Thai Rubber or STR20 block, for April shipment eased to $2.03 a kg from $2.08 a kg. Offers for Thai 60-percent concentrated latex were steady at between $1,620 a tonne and $1,650 in drums, for April shipment.
Tokyo rubber has been supported by tight supply from major producing countries and gains in other commodities, such as gold, silver and oil, which saw increased buying interest from investment funds.
Offers for Indonesia's tyre-grade SIR20 eased to 87.50 US cents per pound ($1.92 a kg) for April/May shipment from $1.94 last week, free on board Plumbing port in South Sumatra.
"Some people still offer rubber at 88.00 cents but I think the value of the market is only 87.50 cents," said a dealer in Jakarta. "Nothing has happened so far. Both buyers and sellers are out of the market because of a weak Tokyo," he said.
Malaysia's tyre-grade SMR20 for April shipment dropped to between $1.95 and $1.96, from $1.98 last week.
On the Shanghai futures exchange, the most active May rubber contract was last traded at 21,770 yuan ($2,709) a tonne, down 130 yuan, due to weak Tokyo futures.
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