Tokyo rubber futures slipped more than 2 percent on Tuesday, moving away from a lifetime high hit the previous day, as a firmer yen against the US dollar ignited selling from speculators. The most active contract on the key Tokyo Commodity Exchange, currently June 2011, settled 9.8 yen a kg lower at 407.8 yen after moving in a choppy 6 yen range. The contract had rallied to a record of 419.3 yen on Monday.
Shanghai rubber futures tracked the Tokyo market lower. The most active May contract ended at 36,030 yuan per tonne, down from Monday's close of 37,110 yuan. Volume was heavy at 1.05 million lots. "It's a case of profit-taking. It's just very volatile, with prices pushed up and down," said a dealer in Singapore. "You won't appreciate such market action."
But dealers said tightness in the physical market, steady demand from top consumer China and firm oil prices would still support the market. US crude prices rose above $91 a barrel on Tuesday, hovering just below a 26-month top hit in the previous session, supported by a weaker dollar and hopes that a major snow storm on the US East Coast would stoke demand for heating oil.
The dollar briefly dropped to a three-week low of 82.49 yen, down 0.4 percent on the day, pressured by offers from Japanese exporters, many of which will be away later this week for year-end and New Year holidays. Thai RSS3 grade jumped to an historic high on Monday to track a rally in Tokyo futures, while tyre makers were chasing nearby cargo despite rising prices due to supply disruption in Southeast Asia, dealers said on Monday.
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