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TOCOM rubber edges higher on short-covering ahead of weekend

TOKYO (May 11): Benchmark Tokyo rubber futures edged higher on Friday, helped by a temporary rise in Shanghai futures and short-covering ahead of the weekend, dealers said.

The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished 0.5 yen higher at 193.4 yen (US$1.77) per kg. For the week, it rose 0.7%.

The most-active rubber contract on the Shanghai futures exchange for September delivery climbed to as high as 11,750 yuan, but ended 10 yuan lower at 11,680 yuan (US$1,845) per tonne.

The TOCOM futures, which set the tone for rubber prices in Southeast Asia, have been slowly recovering since late March, supported by a lower yen against the US dollar, according to Jiong Gu, an analyst at Yutaka Shoji Co.

“Shanghai gains have been capped due to higher inventories there, but Tokyo rubber got a boost from the yen’s decline,” he said. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.3% from the previous Friday, the exchange said on Friday.

“But strong auto sales in April in China may change the trend in Shanghai,” Gu added.

China vehicles sales in April jumped 11.5% from a year earlier to 2.32 million vehicles, an industry body said on Friday, gaining momentum after a sluggish start to the year.

The front-month rubber contract on Singapore’s SICOM exchange for June delivery last traded at 141.1 US cents per kg, down 2.4 cent.

(US$1 = 6.3320 Chinese yuan)
(US$1 = 109.3200 yen)

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