Market and product

April 22 (Bloomberg) -- The Tokyo Commodity Exchange, which trades the benchmark contract for the rubber market, is checking members’ futures positions after volatility increased.

The bourse has asked “every commodity brokerage company about how many long positions they hold in contracts for delivery in April, May and June,” Kazunari Hayakawa, executive managing officer for the exchange, said in an interview today. “We need to check whether any price manipulation is occurring.”

September-delivery rubber, the most-active contract on the exchange, tumbled today as much as 4.3 percent to 311.4 yen per kilogram ($3,347 a metric ton), the lowest level since April 1, and settled at 318.30 yen. The price surged 4 percent in the previous two days and reached a 21-month high of 338.5 yen April 16. A long position is a bet prices will rise.

The April-delivery contract, which expires tomorrow, jumped as much as 1.9 percent today to 450 yen per kilogram, matching the record reached yesterday for a nearby contract.

The price for April delivery surged 37 percent this month. Thailand, the world’s largest producer and exporter, is in a seasonal February-to-April low-production period, reducing supplies of the commodity used to make vehicle tires.

Speculators with short positions in the April month have to buy back the contract by April 23 or the raw material will need to be delivered. Short positions are bets prices will decline.

Spurring Sales

“The action by the exchange spurred sales of rubber futures,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today. “People with long positions in the nearby contract are placing offers to close them.”

The price of the most-active rubber contract in Tokyo has gained 15 percent this year on declining supply and as China, the world’s largest consumer, led a recovery in global economies from the worst postwar recession.

Global tire production is expected to increase by 3 percent to 5 percent a year, led by rising car sales in China, Kazutaka Sonomoto, rubber section manager at Marubeni Corp., Japan’s largest trader of the commodity, said on April 19.

China’s natural rubber consumption is forecast to grow 10 percent from last year to 3.35 million metric tons, according to a report issued last month by the Association of Natural Rubber Producing Countries.

The free-on-board price, or price excluding freight and insurance, of May-delivery Thai ribbed smoked sheet, the grade traded in Tokyo, climbed to a record 128.05 baht ($3.98) per kilogram yesterday, according to the Rubber Institute of Thailand. Prices in Indonesia, the second-largest producer, jumped to the highest since 2008 this year, Rubber Association of Indonesia Chairman Asril Sutan Amir said April 16.

The benchmark Thai cash price may range from $3 to $3.70 a kilogram in the second half of this year as the record level will spur tire makers to shift to cheaper alternatives including synthetic rubber, Marubeni’s Sonotomo said.