Tokyo rubber futures ended down 1 percent on Monday after oil extended losses, but tight supplies in main producing countries could help the contracts regain the psychologically key 300 yen mark. TOCOM's rubber contract for June 2010 delivery settled 3.3 yen per kg lower at 294.8 yen, down from a 16-month high of 306 yen hit on Friday.
Physical prices were mostly unchanged, and some quantity of Indonesia's SIR20 grade was sold to tyre makers late on Friday at $3.08 a kg for nearby shipment. "Quite a number of people think this is just a short-term correction. I would say there's still a chance for the market to test last week's highs again," said a dealer in Thailand's southern city of Hat Yai.
A spike in rubber prices towards their strongest level in more than 50 years may not be sustainable and key producers are looking for ways to prevent a repeat of a brutal correction more than a year ago. Cash rubber has been traded above $3 a kg in January, within sight of a 56-year peak around $3.25 struck in the middle of 2008 on an oil-driven rally in Tokyo futures and tight supplies in the three main producers.
French tyre maker Michelin on Friday blamed high costs and the economic crisis for prompting it to transfer production in Japan to cheaper sites in Asia, Europe and North America, starting in July.
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