Rubber prices continued the correction and shed more than 1% in late trading today, Wednesday (5/23/2018), weighed down by worries of lower demand.
The price of rubber for delivery in October 2018, the most active contract on the Tokyo Commodity Exchange (Tocom), closed down 1.26% or 2.50 points at 196.50 yen per kilogram (kg).
In fact, the main commodity price of the tire maker had moved in the green zone when it opened with a 0.10% rise or 0.20 point at 199.20, after ending down 0.50% or 1 point at 199 levels on Tuesday 22/5). Throughout today's trading, rubber prices are moving at the level of 194.90-199.90.
According to Takaki Shigemoto, analyst of research firm JSC, trimming car import tariffs by the Chinese government raises concerns that automotive production in China may decline.
"Thus, it could weaken the demand for rubber from local tire manufacturers," Shigemoto said, as quoted by Bloomberg.
As it is known, Chinese Finance Minister Liu Kun on Tuesday (22/5) said it plans to reduce the tax levy on import tax of vehicles to 15% from 25%. The move will take effect from 1 July.
At the time, the amount of rubber stocks monitored by the Shanghai Futures Exchange rose 2.8% to 470,374 tons last week, the highest level since November.
Not only that, added Shigemoto, the prospect of a higher supply from Thailand also weighed on rubber prices, as it will end the low production season in the country this month.
Rubber prices also weighed on the continued appreciation of the yen. The yen today tracked up 0.47%, or 0.52 point, to 110.38 per dollar at 13:52 pm, after expiring 0.14 per cent or 0.15 points at 110.90 on Tuesday ( 22/5).
In line with rubber, West Texas Intermediate (WTI) oil price for July 2018 futures advanced further down 0.28% or 0.20 points to U $ 72 per barrel position on the New York Mercantile Exchange at 13:42 pm.
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