Tokyo rubber futures at eight-month low

The key Tokyo rubber futures contract plunged to an eight-month low on Thursday, hit by weak crude oil prices, though bargain-hunting pared losses.
The benchmark Tokyo rubber contract has fallen by a third from this year's high of 324.5 yen struck in June, and some traders said it might eventually test the 200-yen mark.
Physical prices in other parts of Asia were also soft. The most distant February 2007 rubber futures contract on the Tokyo Commodity Exchange closed down 4.8 yen, or about 2.2 percent, at 218 yen ($1.86) per kg.
It fell as low as 213.0 yen, the lowest for a benchmark contract since January.
"The market has declined with increasing momentum and I think it would need an equal amount of energy to regain the ground it's lost," a broker said. "Right now, we are mostly seeing a repetition of the same players liquidating or short-covering."
Oil prices slipped to a five-month low before rebounding on Thursday. Lower oil prices often prompt a shift to synthetic rubber, a petroleum product, from natural rubber.
United States light crude for October delivery traded around $67.71 a barrel after hitting a low of $67.41; it's weakest since April. Physical rubber prices have fallen, in line with TOCOM, regional traders said. In Thailand, both benchmark RSS3 rubber sheet and tyre-grade Standard Thai Rubber, or STR20 block, for October shipments were estimated at $1.80 a kg, free on board.
This compares with offers of $1.86 on Wednesday. Malaysia's tyre-grade SMR20 was quoted at a similar level. Ample availability of rubber and an absence of buying have been weighing on the physical rubber market.
Thai rubber prices have fallen about 50 cents or roughly 22 percent from August, when prices were at about $2.30, a dealer in Thailand's southern city of Hat Yai said. Indonesian rubber grades have found some support due to a seasonal factor, wintering, when rubber tress shed their leaves and latex output declines.
Wintering in Indonesia is expected to last through the end of September.
Indonesia's SIR20 was quoted around 80 US cents a pound, compared with 85 cents on Wednesday.
Traders said potential demand existed but buyers were waiting for prices to come down. The Thai dealer said the Chinese would definitely have to step into the market to buy eventually, and that might take place soon given the market's recent steep decline.
"I think the market's decline to below $2.00 was unexpected and I think we may see some good support at $1.80," he said, adding that some buying might emerge today.
In Shanghai, the most active November rubber contract closed down 350 yuan, or 1.9 percent, from Wednesday's closing price at 18,090 yuan per tonne.