TOKYO, Dec 2 (Reuters) – Tokyo rubber futures fell to a five-year low on Tuesday as a sell-off in equities and oil fanned investor worries about weakening global demand, although the key contract closed off the intraday low.
* The key Tokyo Commodity Exchange rubber contract for May delivery <0#JRU:> fell 10.7 yen, or 8.6 percent, to an intraday low of 113.5 yen per kg, the lowest for any benchmark since July 2003. It closed at 116.6 yen.
* The rebound suggested that selling was petering out for now, said Hitoshi Inagawa, a senior manager at Yutaka Shoji Co in Tokyo.
“Now that the spread between gold and platinum is zero, as is the spread between gasoline and crude oil, a correction is setting in…That’s giving a cue for people to buy rubber back,” Inagawa said.
Rubber, platinum and gasoline futures have been hit harder than other commodities on TOCOM in the past few months as investors worried that a global recession could further trim automobile sales, he added.
* Rubber prices often move in line with stocks and oil prices when investors have strong concerns about the global economy.
* Japan’s benchmark Nikkei share average <.N225> sank 6.4 percent, hitting a nearly two-week closing low, as exporters such as Honda Motor Co <7267.T> tumbled on the yen’s strength against the dollar as fears deepened about the global economy. [.T]
* Oil slid to a 3-½ year low under $48 extending the previous day’s sharp drop as more signs of the poor health of the global economy emerged and after OPEC opted to delay talks on further outut cuts. [O/R]
* The dollar’s early dip to a five-week low versus the yen had prompted selling on TOCOM as it deflates yen-based commodities prices, but the dollar then rose to 93.60 yen , getting a boost from buying by Japanese investors. [FRX/]
* The world’s top rubber-producing countries will meet next week in Indonesia to look for ways to support prices, rescheduling a Bangkok meeting that had to be cancelled after anti-government protests closed Thai airports. [ID:nBKK372175]
* Japan’s crude rubber inventories rose 38 percent in the 10 days to Nov 20, Rubber Trade Association of Japan data showed on Tuesday. [ID:nT171582]
* Trading in the physical rubber market has been slow due partly to rising political risk in Thailand, the world’s top rubber producer. [ID:nSP131986]
* Moreover, concerns about a global recession kept buyers at bay, suggesting prices have more room to fall, traders said.
* “We had expected consumers would come to the market at $1.50, but in vain. It was slightly above $1.30 yesterday. But there were no buyers at all,” said a trader in Thailand, referring to the price of Thai RSS3 tyre grade.
“The worst is not over yet,” he said.

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH MONDAY
Grade Price Change
Thai RSS3 (Jan) $1.30/kg -$0.10
Thai RSS3 (Feb) $1.30/kg -$0.10
Thai STR20 (Jan) $1.30/kg -$0.10
Thai STR20 (Feb) $1.30/kg -$0.10
Malaysia SMR20 (Jan) $1.30/kg -$0.10
Malaysia SMR20 (Feb) $1.30/kg -$0.10
Indonesia SIR20 (Jan) $0.59/lb -$0.03
Indonesia SIR20 (Feb) $0.59/lb -$0.03
Thai USS3 40 baht/kg -4 baht
Thai 60-percent latex (drums, Jan) $1,120/tonne +$20
Thai 60-percent latex (bulk, Jan) $1,000/tonne +$50

Source:  Reuters

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