Jakarta – Tokyo rubber futures could extend losses this week on persistent worries about demand from top consumer China, dealers said today (7 July).
According to Reuters, the most active rubber contract on the Tokyo Commodity Exchange (TOCOM), currently December, slipped to its lowest in nearly three weeks at 204.2 yen (€1.47) on weaker oil prices and high inventory in China.
The contract rallied to its highest in two months at 220 yen a kg in late June, but has since struggled to sustain the gains.
"I would expect TOCOM to trade in a range of 195 to 205 this week. It's very bearish. I think the market is overbought," said an analyst in Tokyo.
"So we expect to see long liquidation this week."
Tokyo futures, which set the tone for physical prices, have dropped about 25 percent so far this year.
While total rubber stocks in China's bonded warehouses Qingdao have slipped to a five-month low, partly on reduced demand for the commodity as a loan collateral, the country still has nearly 150,000 tonnes of rubber in Shanghai.
China is the world's largest user of natural rubber, accounting for about 36 percent of global consumption. It imported 2.47 million tonnes of natural rubber in 2013.