Tokyo rubber ends down by 25 percent

Tokyo rubber futures firmed on this year's last day of trading on Wednesday but the market has lost more than a quarter of its value in 2015 with slowing Chinese demand and ample ssupplies driving prices lower Asian shares unwound early gains as weakness in Chinese stocks continued and investors turned cautious following renewed selling in recently battered crude oil futures.
The Tokyo Commodity Exchange rubber has dropped more than 70 percent from a record high of 535.7 yen a kg in 2011. The market, which has fallen for a third consecutive year, closed 1.3 percent higher at 159 yen per kg on Wednesday. "There is some support for rubber today as investors are buying back short positions," said Kaname Gokon at brokerage Okato Shoji in Tokyo. "It can't rally much as there is no change in fundamentals, too much supply and poor demand."
Investors in the rubber market are concerned about slowing economic growth in top consumer China. Activity in China's manufacturing sector is expected to have contracted for a fifth straight month in December, a Reuters poll showed, likely consigning the world's second-largest economy to its slowest annual growth in a quarter of a century. Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.4 percent from the previous week, the exchange said on Friday.
For some rubber producers in Thailand and other countries prices of the product have dropped below the cost of production. "There is not much downside for prices, the market is likely to rally next year to 180 or 190 yen but it will be hard to break above 200 yen as there is too much supply in China," said Jiong Gu, an analyst at Yutaka Shoji Co Crude oil futures have given up more than 30 percent, reflecting similar bearish sentiment in the commodities world. Oil slipped towards $37 per barrel as the market remained under pressure due to slowing demand and high supplies, while forecasts that a cold snap in Europe and the United States would be short-lived also weighed on prices. The front-month rubber contract on Singapore's SICOM exchange for January delivery slid 2 percent while Shanghai rubber gained 1.7 percent.