TOKYO (March 2): Benchmark Tokyo rubber futures surged to a 1-month high on Wednesday as sharp gains in Asian stock prices, as well as Shanghai rubber futures prompted a flurry of short-covering while the yen’s dip added further support, dealers said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for August delivery finished 5.1 yen or 3.3% higher at 161.7 yen (US$1.42) per kg. It touched a high of 161.9 yen, the highest since Feb 1, breaching the 160-yen mark for the first time in a month.
“The TOCOM prices were lifted as fears of further losses in crude oil prices have receded, while sharp rises in stock markets and a selloff in the yen led investors to cover short positions,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Asian shares rallied to two-month highs on Wednesday as overnight gains in oil prices and a batch of positive economic data from Australia to the United States calmed fears of a global economic slowdown.
The Japan’s Nikkei and the Shanghai Composite Index both jumped more than 4%.
Oil markets closed as much as 2% higher on Tuesday, though U.S. oil eased on Wednesday on industry data that showed a huge build in U.S. crude stockpiles.
Against the yen, the dollar rose to 114.05 yen, recovering further from its double-bottom near 111 hit last month, as investors unwound bets in safe-haven assets.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, also hit a double-bottom in mid-February, as well as mid-January, when the benchmark fell to a 7-year low of 144.5 yen.
“I think the market has hit the floor and is headed for January’s high of 166.3 yen, then a key 170 yen, on the back of stronger equities and oil markets recovery,” Kikukawa said.
The most-active rubber contract on the Shanghai futures exchange for May delivery rose 255 yuan to finish at 10,560 yuan (US$1,612.14) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for April delivery last traded at 117.3 U.S. cents per kg, up 2.6 cent.
(US$1 = 6.5503 Chinese yuan)
(US$1 = 114.2400 yen)
