Yen Weakens, Rubber Price Increases

The movement of rubber prices on the Tokyo commodity exchanges continued to rise in the third consecutive day on Tuesday (31/7/2018), in line with the weakening of the yen.
The price of rubber for January delivery in 2019, the most-active contract on the Tokyo Commodity Exchange (Tocom), today ended up 0.47% or 0.80 points at position 170.40.
The main raw material price of the tire continued its gains with the opening edged up 0.06% or 0.10 points at 169.70 this morning, after ending up 0.95% or 1.60 points at 169.60 yen per kg position Monday (30/7).
Meanwhile, today's yen exchange rate was down 0.10% or 0.11 points to 111.17 per US dollar at 14.03 WIB, after opening slightly higher by 0.03% or 0.03 point at 111.03 .
As is known, the weakening yen gives fresh wind for rubber, which can lift the price of this commodity with the potential increase in demand from buyers.
On the other hand, rubber prices for September delivery in 2018 on the Shanghai Futures Exchange ended down 0.53% or 55 points at 10,305 yuan per ton, after being able to close up 1.12% at 10,360 on Monday.
According to Takaki Shigemoto, an analyst at research firm JSC in Tokyo, data showing a slowdown in China's economy raises concerns about the outlook for rubber demand.
As reported, China's manufacturing sector growth slowed in July due to burden of escalating trade tensions with the United States, bad weather, and reduced domestic demand.
According to National Bureau of Statistics (NBS) data, China's Purchasing Managers 'Index (PMI) fell 0.58% to 51.2 in July from the previous month, below economists' forecast of 51.3.
The gain was the lowest since February 2018, although it is still above the 50 threshold that indicates expansion.
Meanwhile, China's PMI non-manufacturing index, which takes into account the services and construction sectors, is at 54, or down from 55 in June.
"Earlier, rubber prices [on the Shanghai stock] rose on concerns that floods in northern Thailand could limit supply from the largest exporters," Shigemoto added.