Rubber slumped on concern that China may tighten trading rules to curb excessive speculation, and as a stronger dollar reduced the appeal of commodities as alternative assets.
The April-delivery contract declined as much as 1.4 percent to 335.7 yen per kilogram ($4,107 a metric ton) on the Tokyo Commodity Exchange before settling at 337 yen. Shanghai futures plunged as much as 4.4 percent to 31,210 yuan ($4,669) a ton after reaching a record 33,320 yuan yesterday.
Commodities in China snapped a rally as the Zhengzhou Commodity Exchange yesterday increased the margin requirement for rice, rapeseed oil, wheat and sugar trading to 8 percent from 3 percent or 4 percent. The exchange will track “abnormal” trading and recommend investigation by watchdogs, a separate statement dated Oct. 25 said.
“Rubber came under pressure amid speculation that China may be attempting to cap raw materials prices to curb inflation,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone.
China’s increased liquidity after the financial crisis and government curbs on property investments have stoked commodity prices. In the past six months, cotton in Zhengzhou returned 61 percent, rubber in Shanghai gained 34 percent, zinc in Shanghai rose 9.2 percent, while Dalian soybean oil rose 20 percent.
“The government has had to battle anything from speculation in mung beans to garlic in the past and has shown increasing signs of wanting to intervene in futures,” Tommy Xiao, analyst at Shanghai JC Intelligence Co., said by phone from Shanghai. “But it’s like the game Whack-A-Mole: as they knock down one product, another one pops up.”
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