Tuesday, September 27, 2011

Rubber producers urged to cut exports & TOCOM to narrow circuit breaker

Tokyo Commodity Exchange (TOCOM), will halve the price width of its circuit-breaker for rubber futures from 3rd October 2011 to help limit market volatility. When a circuit breaker is triggered, TOCOM suspends trading for five minutes before the trading band is widened, helping to moderate any sharp accelerations in price moments.

Currently, the circuit-breaker is hit when prices move up or down by 10 yen. The new circuit-breaker will be hit after price rises or falls of 5 yen from the night session of 30th September, which is counted as part of the next trading day’s session. The circuit-breaker would kick in three times up to a maximum price move of 20 yen, at which point trading would effectively halt.

Tokyo rubber futures, which set the tone for physical prices, rebounded today after tumbling 12% to a one-year low around 303 yen a kg yesterday, hit by a global sell-off in risk assets. The International Rubber Consortium (IRCo) has urged Thailand, Indonesia and Malaysia to curb exports if rubber prices fall further in the wake of a global economic slowdown.

We’ve advised the three countries to slow exports if the rubber price falls to a certain level that we can’t accept. We are waiting for responses from the three countries. We can’t disclose the price level. We call it our defence price. If the price reaches the threshold, we have to react, said Yium Tavarolit, IRCo’s chief secretary.

Read lot more in Rubber4U – 1st October 2011 issue

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