TOCOM rubber jumps to 3-week high on supply fears due to Thai floods

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TOKYO (Jan 10): Benchmark Tokyo rubber jumped to a 3-week high on Tuesday as investors stepped up buying on supply concerns after heavy flooding hit southern Thailand, a major rubber-producing area, dealers said.

Widespread flooding in Thailand’s south has killed 21 people, hit in the region and shut down infrastructure, officials said on Monday, as the military government increased aid to flood-affected areas.

The (TOCOM) for June delivery finished 11.9 yen, or 4.4%, higher at 279.4 yen (US$2.41) per kg, the highest since Dec 19. Japanese markets were closed on Monday for a national holiday.

“Shanghai futures soared on Monday after the news of Thai floods, which prompted a flurry of buying in an opening in Tokyo on Tuesday,” Toshitaka Tazawa, analyst at Fujitomi Co said.

“The TOCOM may test the multiple-year highs recorded last month if the floods continue to affect rubber production in Thailand,” he said.

The TOCOM benchmark touched its highest since May 23, 2013 at 291.7 yen on Dec 16 last year.

The most-active rubber contract on the Shanghai futures exchange for May delivery also rose 840 yuan to finish at 19,270 yuan (US$2,783.80) per tonne, after hitting a high of 19,350 yuan earlier, the highest in more than two weeks.

Producer prices in China, the world’s biggest rubber buyer, surged the most in more than five years in December and by more than expected as prices of coal and other soared, adding to expectations that global inflation may be stronger in 2017.

“But it seems that paid little attention to China’s economic data,” Tazawa said.

The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 207.1 US cents per kg, up 4.5 US cent.

(US$1 = 6.9222 Chinese yuan)
(US$1 = 115.7100 yen)

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