TOKYO (July 26): Benchmark Tokyo rubber futures dropped on Thursday amid worries over demand in China, the world’s biggest buyer, due to mounting trade tensions, while a blast outside the US embassy in Beijing raised concerns over political stability.
A bomb exploded outside the US embassy on Thursday, wounding the lone assailant, the embassy said in a statement, but police described the weapon merely as a “firework device”.
“The news raised questions about stability of China’s political situation,” said Hiroyuki Kikukawa, general manager of research, Nissan Securities.
“Investors are worried about both economy and politics of China going forward amid its trade wars with the United States,” he said.
The new Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished at 167.1 yen (US$1.51) per kg, down 1.7 yen, or 1%, from an opening price of 168.8 yen.
The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, hovered around a near 22-month-low hit in the previous session.
The most-active rubber contract on the Shanghai futures exchange for September delivery rose 15 yuan to finish at 10,295 yuan (US$1,519) per tonne.
“We hear there may be some impact on rubber output in Yunnan province due to heavy rain, which may cap further losses, but the rubber prices is likely to stay under pressure because of worries over China,” Kikukawa said.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 132.7 US cents per kg, unchanged from the previous day.
(US$1 = 110.7100 yen)
(US$1 = 6.7796 Chinese yuan)