TOCOM rubber climbs on stronger oil, but posts weekly loss

TOKYO (Aug 19): Benchmark Tokyo rubber futures rose on Friday after hitting a one-week low in the previous session as buoyant crude oil prices boosted risk appetite, but posted their first weekly fall in three.

“The market has been really quiet this week with many investors away on summer holidays,” said Toshitaka Tazawa, an analyst with Fujitomi Co.

“Higher oil lent support today, but gains were limited in thin trade.”

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery <0#2JRU:> finished 1.8 yen, or 1.2%, higher at 157.0 yen (US$1.57) per kg, moving away from Thursday’s low of 154.8 yen, the lowest since Aug. 12.

For the week, TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, lost 0.8%.

Brent crude oil prices rose above US$51 a barrel to hit an eight-week high and were on track to rise for a seventh trading day, as hopes that producers could agree measures to support crude buoyed sentiment.

The dollar clawed back some losses against its Japanese counterpart, rising 0.4% to 100.24 yen, though it was still down 1% for the week.

“I expect the TOCOM to stay in a narrow trading range again next week,” Tazawa said.

“If top producers agree on an extension of export curb by the end of this month, it may briefly boost the prices, but I think that would be short-lived due to concerns over increasing output in Southeast Asia.”

Asia’s top rubber producers agreed in February to cut exports by 615,000 tonnes for six months from March, moving to lift prices that have tumbled amid excess supply to their lowest since the global financial crisis.

The most-active rubber contract on the Shanghai futures exchange for January delivery rose 110 yuan to finish at 13,085 yuan (US$1,968.17) per tonne.

The front-month rubber contract on Singapore’s SICOM exchange for September delivery last traded at 131.1 US cents per kg, down 0.7 US cent.

(US$1 = 100.2200 yen)
(US$1 = 6.6483 Chinese yuan)