Rubber falls

The Colombo Rubber Auction yesterday experienced a sharp drop in prices, following the falling of natural rubber prices in regional markets. The Latex Crepe 1X dropped by Rs.50 to 75 (Rs.550to 575) while RSS No.1 fell by Rs.20 (Rs.550).


According to commodity brokers, Asian physical rubber prices are on the slide, as futures continue to slide.

China buyers continue to bid low--around $4,800-$4,850/ton vs offer prices of around $5,200/ton for STR20, so no deals were struck, said a Hat Yai-based trader. He added that "with Tocom prices falling each day, there seems to be no way out." Thailand's premium grade STR20 was sold at $5,220/ton, FOB, for June shipment to a Japanese tire maker.

Shanghai Futures Exchange natural rubber settles lower, in line with broad weakness in the commodities markets, after a downward revision to Standard & Poor's outlook on U.S. sovereign debt overnight.

Analysts say the drop seems to be a knee-jerk reaction, and rubber may still consolidate over the next few sessions, with investors taking external cues. The benchmark September rubber settles CNY710, or 2%, lower at CNY34,210/ton

Tocom rubber futures settle lower after falling by as much as 5.0% intraday to Y403.7--a level not seen since March 29. The overall market is lower, after Standard & Poor's cut its outlook on U.S. government debt. Shanghai rubber falls sharply Tuesday as well, with prices weighed by Beijing's latest RRR hike. While producers say rubber supply is still tight, traders on the purchasing side are cautious.

"I don't really know if the supply is as tight as they say," said a Singapore-based dealer. Traders are also awaiting clearer cues on this year's production after the wintering season, and as Thai production picks up after last week's Songkran break and recent floods. Unexpected weather woes have hit the rubber trade in the past year, and participants remain wary of the weather. The benchmark September rubber contract settles Y15.3 or 3.6% lower at Y409.7/kg.

source - www.dailymirror.lk