TOCOM slips to nearly 2-year low on escalating trade war

TOKYO: Benchmark Tokyo rubber futures slipped to their lowest in nearly two years on Tuesday amid fears over the latest escalation in months-long the U.S.-Sino conflict.

U.S. President Donald Trump escalated his trade war with China on Monday, imposing 10 percent tariffs on about $200 billion worth of Chinese imports.

"Worries that deepening trade tension between the U.S. and China may hurt the global economy weighed on rubber prices," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

The Tokyo Commodity Exchange (TOCOM) rubber contract for February delivery  finished 1.8 yen, or 1.1 percent, lower at 166.1 yen ($1.48) per kg, after hitting the lowest since Oct. 4, 2016 at 164.1 yen earlier in the session.

But TOCOM, which sets the tone for rubber prices in Southeast Asia, retraced some earlier losses in later trade.

"The recovery underlined that there would be buyback once the TOCOM dives below the key 165-yen level as in August and earlier this month," Yoshida said, adding that the Tokyo market is not likely to plunge from the 165-yen mark for the time being.

The most-active rubber contract on the Shanghai futures exchange for January delivery dropped 115 yuan to finish at 12,135 yuan ($1,767) per tonne.

The front-month rubber contract on Singapore's SICOM exchange for October delivery last traded at 132.9 U.S. cents per kg, up 0.6 cent.