Tokyo rubber down

Tokyo rubber futures fell on Monday as technical selling took precedence in a market lacking fresh incentives to provide direction. A Tokyo-based trader said there was often a downward risk to prices at the end and the beginning of the month when funds often rolled over their positions.
The key Tokyo Commodity Exchange rubber contract for January 2009 delivery, which debuted on Monday, was trading at 332.9 yen per kg at 0440 GMT, compared with the opening price of 337.1 yen. The opening price was the highest for a benchmark contract since July 15.
Traders said crude oil prices, currently down about 16 percent from record highs, would continue to be a primary factor providing direction for rubber. "It's hard to imagine crude oil falling dramatically ... which is likely to mean that TOCOM rubber will trade at a firm level as well," the trader said.
US light crude for September delivery was trading above $123 a barrel after bouncing back from a seven-week low, but worries about slowing fuel demand continue to hang over the market. Prices are down from their record peak of over $147 marked this month. The dollar rose to a one-month high above 108.00 yen on Monday, riding on a momentum gained from better-than-expected US indicators released late last week. Physical rubber supplies were recovering, but traders in Asain producing nations said shipments have so far fallen short of expectation.
YOKOHAMA RUBBER TO PRODUCE TYRES IN RUSSIA, BRAZIL:
TOKYO: Yokohama Rubber Co, Japan's third-biggest tyre maker, said it plans to produce tyres for passenger cars in Russia and Brazil from 2010 to meet rising demand in these fast-growing economies. It will be the first Japanese tyre maker to start local production in Russia. Bigger rival Bridgestone Corp already has tyre factories in Brazil.
Yokohama Rubber currently ships tyres to these countries from factories in Japan and the Philippines. But it wants to build local plants due to the strong business prospects in Russia and South America and also to avoid high tariffs on imported tyres, a company spokesman said.
"It makes more sense to produce tyres there and sell them directly in the region," the spokesman said. "We'll keep shipping value-added products from Japan... (The plants) will start small and expand if and when sales increase," the spokesman added.
Yokohama Rubber has set an annual sales target for passenger car tyres in Russia at 2.5 million for the fiscal year starting in April 2011, up 150 percent from its sales in 2007/08. In South America it will aim to sell 1 to 1.2 million tyres in the same year, up 25 to 50 percent from 2007/08.
The company will decide on the details of the plants, including capacity and location, by March 2009. Building two plants with an annual capacity of 1 million tyres each would cost about 10 billion yen ($93 million) overall, the spokesman said.
Yokohama Rubber's main factory in Japan has an annual capacity of some 14 million tyres. In the year that ended in March, Yokohama Rubber sold a little more than 1 million passenger car tyres in Russia and 800,000 to South America. It declined to comment on total tyre sales for the year, but it added that the value of exports accounted for 44 percent of its total sales in fiscal 2007/08, up 4 percentage points from a year earlier.