Benchmark Tokyo rubber futures plunged to a near 3-month low on Monday as weaker oil prices dampened investor sentiment and prompted fresh sells, while tumbling Shanghai futures also added to pressure, dealers said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery <0#2JRU:> finished 7.3 yen, or 4.5 percent, lower at 155.8 yen ($1.42) per kg, after hitting a low of 154.3 yen, the lowest since Feb. 29.
"Slumping prices of commodities including oil hurt market sentiment," said Toshitaka Tazawa, analyst at Fujitomi Co.
Oil prices fell in Asian trade on Monday on a strong dollar and signs that global crude supply is holding up even as volumes hit by unplanned outages rise to at least five-year highs.
On the downside, the most-active rubber contract on the Shanghai Futures Exchange for September delivery tumbled 570 yuan to finish at 10,295 yuan ($1,572.21) per tonne.
An increase in Shanghai stocks was also behind the slide, dealers said.
Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.2 percent from the prior Friday, the exchange said on Friday.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have lost more than 20 percent since an April high of 205.1 yen, weighed down by oversupply fears and weak demand in top buyer China.
"Rubber prices are expected to head lower as there is no reason to buy and investors are concerned over slowing economy in China and higher output at Southeast Asia where wintering season is ending," Tazawa said.
Rubber is tapped year-round, but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand, Malaysia and Indonesia lasts from around February to May.
The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 122.0 US cents per kg, down 7.4 cent.
