Asian Rubber Futures Settle Mixed; Producers Seek To Calm Market

Asian rubber futures settled mixed Tuesday in a day of volatile trading that saw prices pick up
later in the trading day, as producers sought to calm the market.
Benchmark August natural rubber futures on the bellwether Tokyo Commodity Exchange settled 8.1% lower at Y353 a kilogram after falling by as much as 13% in the evening session Monday. Trade on Tocom was halted for most of Monday due
to the triggering of a series of circuit breakers.
"I think Tocom may have found a floor for now, and traders are looking for good news to push it up after prices fell
so much," a trader in Thailand said, referring to the Thai Deputy Prime Minister Suthep Thuagsuban's pledge late Monday
to maintain the price of local unsmoked sheet 3 rubber above THB120/kg.
This was followed by International Rubber Consortium acting Chief Executive Yium Tavarolit saying Tuesday that IRCo
will convene a meeting, likely this week, with public and private industry stakeholders to discuss measures to support
natural rubber prices.
"We will propose that exporters not export rubber at certain price levels that are below market fundamentals," Yium
said.
Later in the day, the Association of Natural Rubber Producing Countries said demand won't be significantly impacted by
the earthquake in Japan.
"Tire companies having plants in the country's northeast have already confirmed that there is no damage to their
buildings or facilities," ANRPC Secretary-General Djoko S. Damardjati said in a statement posted on the association's
website. ANRPC member countries account for around 92% of global natural rubber production. IRCo member countries
account for 70% of global natural rubber output.
Meanwhile, Thai Rubber Association Chairman Luckchai Kittipol said fundamentals point to Tocom rubber moving to
Y400/kg "soon."
The industry support sent Tocom rubber rebounding in the night session, with the benchmark August contract gaining as
much as 7.4% to Y379/kg. August Tocom rubber ended Y16.5 higher at Y369.5/kg in the session, which is considered part of
the next day's trading.
Overall market sentiment may stay poor in Japan, however, due to fears that the nuclear crisis will worsen.
"There was so much panic selling yesterday (Monday), so a technical rebound at this stage is possible," a Tokyo-based
broker said. "There is no point talking about fundamentals right now. These are very, very extraordinary circumstances
in Japan."
He added that any upside may be temporary, as Tocom rubber is well above the levels that sparked its previous rally
last year, and there's still plenty of bearish sentiment.
Benchmark Tocom rubber was trading near the Y250 level last July, less than half the Feb. 18 peak of Y535.7/kg.
Natural rubber futures on the Shanghai Futures Exchange and the Agricultural Futures Exchange of Thailand fell, taking
cues from the Tocom.
But rubber futures on the Singapore Commodity Exchange rebounded in early trade, and stayed in the positive territory
over the course of the trading day.
Sicom rubber is closely watched by physical rubber traders, and its prices are used as benchmarks in the spot market.
The volatile futures market kept physical traders on edge. "It's pretty quiet today still; I think buying may pick up
tomorrow if prices keep going up," a Singapore-based dealer said.
Physical Thai USS3 continued to trade below THB120 a kilogram Tuesday despite the deputy prime minister's pledge to
keep it above that level.
"The comments are meant to be a psychological boost; they don't take effect immediately," said a trader in southern
Thailand who sells USS3.

Asian Rubber Futures
March 15 Change from
previous settlement
Tocom Aug RSS3 Y353/kg Down Y31.1
Shanghai May SCR5 CNY33,270/ton Down CNY705
Thai Oct RSS3 THB125.5/kg Down THB4.4
Sicom Apr RSS3 430 U.S. cents/kg Up 10.2 cents
Sicom Apr TSR20 398 U.S. cents/kg Up 18 cents

Physical prices in Asia, quoted in U.S. cents/kg, free on board:


Grade Shipment March 15 March 14
Bids Offers Bids Offers
RSS3 Apr/May - 430-440 - -
STR20 Apr/May - 410 - -
SIR20 Apr/May - 400 - 385-390
SMR20 Apr/May - 400 - 410

USS3 Mar THB98-THB101.55/kg THB89.00-THB102.59/kg