Key TOCOM rubber futures ended down 1.7 percent on Thursday as profit-taking set in on news that rubber stocks in China had ballooned, which also dragged down the Shanghai market. The key Tokyo Commodity Exchange rubber contract for July delivery ended down 5.5 yen at 311.1 yen, after touching an intraday low of 309 yen.
"The market has entered a phase of correction after the benchmark contract rose from 270 yen. Many investors who bought at high prices on recent rallies ditched the contract," he said. Both the TOCOM and Shanghai benchmark contracts have risen nearly 20 percent since early January after the Thai government approved a 15 billion baht plan to buy rubber at 120 baht per kg to support prices.
A senior official said this week the government plans to start the intervention scheme in mid-February. Rubber stocks in China's bonded warehouses in Qingdao are estimated at between 230,000 and 250,000 tonnes, higher than around 200,000 seen in late 2011, five dealers said on Thursday, curbing demand for tyre grade in the physical market. The most active Shanghai rubber contract for May delivery closed down 150 yuan at 27,335 yuan per tonne.