TOKYO (Feb 4): Benchmark Tokyo rubber futures jumped on Thursday, rebounding from a 3-week low hit in the previous session, after an agreement by Asia’s top rubber producers to cut exports for six months from March eased fears over a supply glut and triggered short-covering.
The Tokyo Commodity Exchange rubber contract for July delivery <0#2JRU:> ended up 3.7 yen, or 2.4%, at 157.3 yen (US$1.34) per kg, after hitting a high of 158.5 yen.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have been under pressure amid nagging concerns about slowing demand growth in top buyer China and on oversupply in Asia.
In a move to lift prices that have tumbled to their lowest since the global financial crisis, Asia’s top rubber producers said they have agreed to cut exports by 615,000 tonnes for six months from March.
“The news led investors to unwind short positions,” said Jiong Gu, analyst at Yutaka Shoji Co.
“But it did not attract much of fresh buys as their decision underlines a delay in shipments, not a reduction of output, which means extra supply may hit the market after the six months. That limited gains,” Gu said.
Instead of reducing exports, rubber producers should cut production as “a better strategy moving forward,” said a rubber trader in Kuala Lumpur.
The most-active rubber contract on the Shanghai futures exchange for May delivery climbed 205 yuan to finish at 10,335 yuan (US$1,571.50) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for March delivery last traded at 109.5 US cents per kg, up 1.4 US cent.
(US$1 = 117.5000 yen)
(US$1 = 6.5765 Chinese yuan)
