Key Tokyo rubber futures fell nearly 3 percent on Wednesday to hover around 290 yen as economic uncertainty fanned by the US financial crisis rekindled fears about demand for the industrial commodity. The key Tokyo Commodity Exchange rubber contract for February 2009 delivery fell to a trough of 288.5 yen per kg, down 8.1 yen or 2.7 percent from Monday.
Tokyo financial markets were closed on Tuesday for a national holiday. It was trading at 290.1 yen at 0501 GMT. "Funds are reluctant to invest in risk assets, so rubber is under pressure. General sentiment for rubber is still very bearish," said Jun Nishimuta, analyst at Kanetsu Asset Management in Tokyo.
"Concerns about the US economy have not been erased, and the market just doesn't have the strength to move above 300 yen," a second analyst said. The benchmark contract for rubber, which is mostly used to produce tyres, has been trading below 300 yen for about a week.
Key TOCOM rubber faced some technical resistance at its 10-day moving average of 295.5 yen, though the market was keen to see whether the key contract could fill in a chart gap to 300.0 yen created when it dropped sharply on September 16.
The spot September contract expired at 380.1 yen a kg with 6 lots of deliveries, in the highest expiry price and the lowest delivery volume since November 1984 when three exchanges for textiles, gold and rubber were merged to form TOCOM. "There are traders that want rubber, but there are just not enough physical supplies," an official at Kanetsu Asset said.
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