TOKYO, June 27 (Reuters) – Benchmark Tokyo rubber futures bounced back 1.3 percent on Thursday, supported by a jump in Nikkei stock prices, but pared early gains as Shanghai rubber prices weakened due to fragile sentiment over China’s economic outlook.
Japan’s Nikkei share average rebounded from a three-day losing streak, as fears of U.S. stimulus pullback and a Chinese credit crunch eased. The benchmark marked its biggest one-day percentage gain in 13 sessions.
The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for December delivery rose 2.9 yen to settle at 230.1 yen ($2.36) per kg.
The contract climbed as high as 231.9 yen early in session.
“The market tone improved after fears of a credit crunch in China’s banking system eased,” said Gu Jiong, an analyst at Yutaka Shoji Co. He said the contract would trade in a range of 225 yen to 235 yen for a while.
The contango for TOCOM rubber markets has narrowed recently. “Concerns about weakening demand in China later this year have curbed buying in the distant contract relative to the spot month contract,” he said. “But I don’t think we need to worry about backwardation.”
The rubber market is usually in contango, where longer-dated contracts command a premium to those for immediate delivery. Backwardation is an opposition situation.
The most-active rubber contract on the Shanghai futures exchange for January delivery fell 175 yuan to 17,760 yuan ($2,900) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for July delivery last traded at 222.00 U.S. cents per kg, down 0.90 cents.
($1 = 97.4350 Japanese yen)
($1 = 6.1470 Chinese yuan)
(Reporting by Yuka Obayashi and Risa Maeda; Editing by Prateek Chatterjee)