New benchmark Tokyo rubber futures tanked nearly 4% on Tuesday, hit by a flurry of sells after Shanghai and Tokyo stock markets plunged, while crude oil prices took a renewed slide, driving investors to safety and boosting the safe-haven yen.
The Tokyo Commodity Exchange (TOCOM) rubber contract for July delivery finished at 158.3 yen (US$1.34), down 6.2 yen or 3.8%, from an opening price of 164.5 yen.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, touched a four-week high in the previous session as risk aversion eased, after a sharp rise in oil prices last Friday, but the market turned sour again as financial markets across Asia took another beating.
"Stock prices tumbled, oil prices were battered and the yen rose against the U.S. dollar, all of which added to pressure," said Toshitaka Tazawa, an analyst with Fujitomi Co.
U.S. crude futures dropped back below US$30 a barrel in Asian trading on Tuesday, extending a near 6% fall made in the previous session, amid news that Iraq's output reached a record high last month.
Mainland Chinese shares slumped more than 6% to a 14-month low in another sign that authorities in Beijing have their work cut out in their efforts to stabilise the fickle domestic markets, while Japan's Nikkei dropped 2.4%.
The dollar was down 0.45% against the yen at 117.76 yen. A stronger yen makes yen-denominated assets more expensive when purchased in other currencies.
"The rubber market looks really bearish now as the benchmark missed to reach a key 170 yen level in a rebound phase," he said.
The most-active rubber contract on the Shanghai futures exchange for May delivery fell 195 yuan to finish at 10,155 yuan (US$1,543.27) per tonne.
The front-month rubber contract on Singapore's SICOM exchange for February delivery last traded at 107.3 U.S. cents per kg, down 2.7 cent.
