Benchmark Tokyo rubber futures tumbled on Tuesday tracking declines in Shanghai market, as trade dispute between China and the United States flared up again, in a worrying sign for global growth prospects.
Tokyo Commodity Exchange (TOCOM) futures, which set the tone for rubber prices in Southeast Asia, rose in early trade from a 12-week low, before falling sharply on intensifying Sino-US trade tension.
US president Donald Trump threatened to impose a 10% tariff on US$200 billion of Chinese goods, promoting a swift warning from Beijing of retaliation, as the trade conflict between the world's two biggest economies quickly escalated.
"The Sino-US trade war definitely affected the mood in the whole market, which triggered the sharp fall of rubber futures," said Hu Haitao, researcher, Yinglu Asset Management (Shanghai) Co Ltd.
"The main reason, however, supporting the drop is still the weak fundamentals. Supplies are increasing, while demand remains weak," Hu said.
The Tokyo Commodity Exchange rubber contract for November delivery finished 3.1 yen lower at 173.7 yen per kg.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 620 yuan to finish at 10,190 yuan per tonne.
The front-month rubber contract on Singapore's SICOM exchange for July delivery last traded at 133.0 US cents per kg, down 3.9 cents.
