TOKYO: Key Tokyo rubber futures tumbled on Tuesday, pulled lower with a Shanghai market slide on concerns about demand from China, the world's top rubber consumer, while traders turned to physical prices for clues on the market's trend.
The benchmark Tokyo Commodity Exchange rubber contract for July delivery settled down 18.2 yen or 3.5 percent at 506.7 yen per kg, posting its biggest daily loss in about a month.
* The contract, which hit a record high of 535.7 yen last week, fell as much as 5.1 percent to 498 yen, falling below 500 yen for the first time in two weeks.
* Deliveries against the expiring February rubber futures contract edged down to 310 lots, or 1,550 tonnes, from January's 314 lots, TOCOM said on Tuesday.
* The newly listed August contract will be the benchmark when it starts trading on Wednesday.
* The most active Shanghai rubber futures for May delivery closed on Tuesday at 39,700 yuan ($6,040) per tonne, down about 2 percent from Monday's close of 40,500 yuan. It fell as much as 2.8 percent earlier in the day. Volume stood at 890,908 lots. The contract hit a record high of 43,500 yuan on Feb. 9.
"Shanghai futures have been sluggish even when TOCOM was extending gains to record highs, and this widening gap has made TOCOM expensive relative to Chinese prices," said Kazuhiko Saito, chief commodities analyst at Fujitomi Co Ltd.
"There were expectations that Chinese buyers would return after the Lunar New Year holidays, but demand did not pick up as strongly as previously thought, capping Shanghai prices," he said.
Chinese tyre makers are slowing their imports due to high overseas prices, traders said.
Asian physical rubber prices stayed high, with the benchmark Thai RSS3 hovering around $6.5 per kg, traders said.
"The offer price for Thai physical rubber is key in determining the outlook for TOCOM and Shanghai," Fujitomi's Saito said. "If the physical offer prices come down, then there is more downside scope for TOCOM to narrow the gap with Shanghai. If physical prices remain steady, then Shanghai rubber may start to climb and pull TOCOM higher."
Record high rubber prices are luring foreign rubber exporters and consumers to invest in new plantations in Cambodia, where output could double in five years.
Thailand, the world's biggest rubber producer and exporter, is likely to boost natural rubber production 10 percent this year to 3.3 million tonnes and exports are expected to rise 7.4 percent to 2.9 million tonnes, said a Thai Rubber Association official.
US crude oil futures hit a 2-? year high on Tuesday on concern that violence in Libya could cut more of the OPEC-member's output and that a similar story could play out in other top oil producers in North Africa and the Middle East.
The euro fell 1 percent on the day against the dollar and the New Zealand dollar tumbled to a nearly two-month low on Tuesday as escalating Middle East tensions and a New Zealand earthquake sparked safe haven flows into the greenback.
Japan's Nikkei stock average fell on Tuesday, slipping from 9-1/2-month highs for its first decline in seven days in profit-taking triggered by turmoil in the Middle East that could have a medium-term effect on Japanese stocks.
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