Commodity Prices in China Decline on Probe Report, Securities Times Says

Commodity prices in China slumped after the Securities Times said regulators are investigating large positions in natural rubber futures, spurring concern that some traders may be forced to sell.

Rubber prices on the Shanghai Futures Exchange plunged by the most in three months, with declines spilling over into copper, zinc, soybeans and sugar after the Securities Times report, which cited people it didn’t identify. An official at the Beijing-based China Securities Regulatory Commission, who didn’t wish to be identified, declined to comment. The Securities Times is affiliated with the state-run People’s Daily.

“The market was in turmoil on rumors that a brokerage based in Zhejiang province is under investigation by the securities regulator because of alleged manipulation of the natural rubber market,” said Tommy Xiao, analyst at Shanghai JC Intelligence Co., by phone from Shanghai.

Rubber futures in Tokyo have advanced about 39 percent over the past year, boosted by higher demand from China, the largest buyer, and limited supply. Prices in April tumbled as the Tokyo Commodity Exchange checked futures positions held by its members after the nearby month jumped to a record.

January-delivery rubber on the Shanghai Futures Exchange dropped as much as 4.6 percent, the most since June 7, to 25,230 yuan ($3,718) a metric ton before closing at 25,445 yuan. Rubber in Tokyo dropped to a two-week low of 290.9 yen per kilogram ($3,474 a ton) and last traded at 292.5 yen.

Shanghai Selloff

Speculation of a probe also fuelled a selloff in copper in Shanghai, with the December-delivery contract in tumbling as much as 4.4 percent to 57,170 ($8,424) yuan. Prices on the London Metal Exchange tracked declines with the three-month contract dropping as much as 2.8 percent to $7,460 a ton.

“There’s market talk today that a certain trader is being investigated by the securities regulator, leading to a large liquidation earlier,” Ying Haoliang, an analyst at Orient Securities Futures Co., said by phone from Shanghai.

Zinc in Shanghai dropped by the daily 5 percent limit to 17,190 yuan a ton and the metal in London declined 6.5 percent, the most since June 29, to $2,075.25 a ton. Sugar on the Zhengzhou Commodity Exchange fell as much as 2 percent to 5,497 yuan a ton and soybeans in Dalian slipped 2.3 percent to 3,982 yuan.

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To contact the Bloomberg News staff on this story: Helen Sun in Shanghai at hsun30@bloomberg.net and William Bi in Beijing at wbi@bloomberg.net;

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