Rubber prices fell after a two-day stagnant finish in previous trading, pressured by rising global reserves and expectations of a surplus this year.
At the close of trading Thursday (1/3/2018), the price of last contract rubber in August 2018 at Tokyo Commodity Exchange (Tocom) closed down 1.30 points or 0.67% to 192.50 yen per kilogram (kg). Year to date (ytd), the price weakened 5.73%.
Earlier, the price of rubber opened in the red zone with a 0.21% decline at 193.40, after stagnating at 193.80 yen per kg on Wednesday (28/2).
Takaki Shigemoto, an analyst at JSC, said rubber prices on commodities were pressured by concerns that rubber stocks in Japan and China will continue to rise amid low demand.
Based on data from the Japan Rubber Association released Thursday (1/3), Japan's raw rubber reserves increased 1.5 percent per February 10, 2018 to 14,956 tons.
Meanwhile, rubber stocks monitored by the Shanghai Futures Exchange (SHFE) rose 0.1% to 434,550 tonnes last week, a 13th consecutive weekly gain.
Central Capital Futures analyst Wahyu T. Laksono said the weakening of rubber prices was triggered by a growing supply that raised concerns that global rubber production grew at a faster pace than demand.
"This is not apart from the role of the world's largest producer countries that are incorporated in the International Tripartite Rubber Council (ITRC), namely Thailand, Indonesia, and Malaysia," said Wahyu to Bisnis recently.
In December last year, the three countries contributing up to 70% of the total global production have agreed to apply the concept of Agreed Export Tonnage Scheme (AETS) or 350,000 tons of rubber export restrictions lasting 3 months from January to March 2018.
In 2018, world rubber demand is projected to increase by 2.3 percent to 12.4 million tons, while supply is predicted to reach 12.5 million tons, up 3 percent from last year.
"It is estimated that in the first quarter of 2018, rubber prices moved in the range of 153.20 yen-206.10 yen per kilogram."
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