Rubber prices tumbled nearly six percent to a range of 170 levels in trading this morning, Friday (23/3/2018), amid heating up trade tensions between the United States (US) and China.
The price of rubber for August 2018 at the Tokyo Commodity Exchange (Tocom) dropped 5.98 percent or 11.20 points to 176.10 yen per kilogram (kg) at 1024 GMT.
Previously, rubber prices opened down 0.05% or 0.10 points at the level of 187.20 yen per kg, after trading on Thursday (22/3) able to end the rebound with a rise of 0.16% or 0.30 points in position 187.30.
According to Hideshi Matsunaga, an analyst at brokerage firm Sunward Trading, a sell-off hit rubber and other industrial commodities as trade pressure hit the US and China.
"It has raised fears of a trade war that could harm global economic growth," he said, as quoted by Bloomberg.
On Friday (23/3), hours after President Donald Trump instructed Trade Representative Robert Lighthizer to impose tariffs on at least US $ 50 billion worth of Chinese imports, the Commerce Ministry of China announced plans for a similar action.
When risky assets hit, the performance of the yen as a safe haven asset was boosted to the strongest level in more than a year.
The yen continued to appreciate 0.40% or 0.42 points to 104.86 per dollar at 10:30 am, after expiring 0.73 per cent at 105.28 in trading on Thursday.
As is known, the strengthening of the Japanese yen exchange rate against the US dollar makes the price of commodities traded in this currency to be relatively more expensive for overseas buyers. As a result, demand for these commodities has the potential to decline.
"At the same time, the lack of agreement among rubber exporting countries to extend export restrictions beyond March also disappointed investors," added Matsunaga.
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