TOKYO (April 12): Benchmark Tokyo rubber futures extended gains to hit an 8-month high on Tuesday as firmer prices of oil and other commodities fed appetite for risk, while China’s solid auto sales in March bolstered hopes of a pick-up in demand in the world’s top buyer.
The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery <0#2JRU:> finished 3.8 yen, or 2.1%, higher at 189.0 yen (US$1.75) per kg, after a 4.6% jump the previous day.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, earlier touched a high of 190.2 yen (US$1.76), surpassing last week’s high of 188.4 yen and hitting the highest since August 18 last year.
“Bullish trend in oil, gold and other commodities increased investors’ appetite for risk and prompted short-coverings and fresh buys,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Oil prices were stable on Tuesday, with US crude futures holding above US$40 per barrel and Brent approaching US$43 ahead of a meeting of major producers to discuss freezing output levels to rein in ballooning oversupply.
Gold jumped to a three-week peak on Tuesday on expectations the Federal Reserve would not raise US interest rates soon and as the dollar traded close to its lowest in nearly eight months, though profit-taking chipped away at some recent gains.
“Hopes for demand recovery in China after strong auto sales in March also helped lift Shanghai rubber futures, which added support to the TOCOM,” Kikukawa added.
Vehicle sales in China grew 8.8% in March and are expected to grow 5% in the second quarter of 2016, China’s automakers association said on Tuesday, slowing slightly from the first three months of the year.
The most-active rubber contract on the Shanghai futures exchange for September delivery surged 400 yuan to finish at 12,425 yuan (US$1,924.18) per tonne.
“Technically, the market looks pretty strong. The TOCOM benchmark will likely head for 200 yen level,” Kikukawa said.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 151.4 US cents per kg, up 3.3 cent.
(US$1 = 108.1400 yen)
(US$1 = 6.4573 Chinese yuan)
(US$1 = 108.2300 yen)
