Tokyo rubber ends down 36 percent for 2011

31 Dec, 2011

Tokyo rubber futures ended the year down around 36 percent, hurt by the festering eurozone debt crisis that triggered demand worries, but prices are expected to find some support from limited supply early next year. The benchmark rubber contract on the Tokyo Commodity Exchange for June delivery fell 2.1 yen to settle at 263.4 yen ($3.39) per kg. It touched a low of 262.9 yen earlier in the session, its lowest since November 28.
"Players wanted to liquidate contract to avoid risks when the market resumes trading next year, but I think TOCOM prices should be supported by limited supply next year anyway," one dealer said. Rubber supply was expected to drop significantly in January and February as the dry season in Thailand, the world's biggest rubber producer, cuts latex output.
TOCOM rubber prices hit a record high of 535.7 yen in February this year due to a combination of seasonal dry season that cut supply and hoarding by local traders who kept rubber in warehouses, waiting to capitalise in higher prices. But the European debt crisis and rising fears of a global economic slowdown drove benchmark rubber prices to this year's low of 248.6 yen in November.
Physical smoked rubber sheet prices (RSS3) dropped to $3.30 per kg in November from a record high of $6.40 per kg in February. That forced the world's top three rubber producers - Thailand, Indonesia and Malaysia - to set up an urgent meeting in Bangkok in November to seek ways to stabilise prices. Benchmark Thai smoked rubber sheet was at $3.35 per kg on Friday. On the day TOCOM futures fell to their year low, Thai RSS3 was at $3.3 per kg.

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