Japanese rubber futures ended lower on technical sales on Friday, falling below the closely watched 200 yen level for the first time since November 24, 2005. The benchmark April delivery fell 4.7 yen per kg to settle at 199.4 yen ($1.69) per kg, as prices stayed below 200 yen despite recovering from an intrude low of 197.4 yen due to speculative buying.
"Technically, prices should rebound on short-covering, but I don't see any factor to support prices to rise above 200 yen," said a Japanese trader. "There was a brief rebound. Maybe it was not only short-covering, but also fresh buying as players expected to take profit later," he added. Dealers said they expected TOCOM prices to move in the narrow range of 195-200 yen in bearish sentiment next week due to the lack of support from both technical and fundamental fronts.
"It's not often we see prices falling below 200 yen and I think we will hardly see prices rise above the level again when the sentiment is very poor," a trader in Thailand said. Prices have fallen about 10 percent in the last week as speculators sold rubber repeatedly in a bearish technical market, with fundamentals also dampening sentiment given ample physical supply.
Chart watchers said there was no clear new technical support, but a level of around 185 yen, reached around the same time last year, could be the next chart point. Traders watch the oil market closely as lower oil prices slow a shift in demand to natural rubber from synthetic rubber, a petrochemical product.
On Thursday, US crude oil futures fell $2.50, or 4.3 percent, to $56.26 a barrel, their lowest close since November 18, 2005, due to forecasts of a mild winter in the United States and swelling US crude stockpiles.
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