TOKYO, Aug 15 (Reuters) – Benchmark Tokyo rubber futures ended higher on Tuesday, bouncing back from a one-week low hit earlier in the session, on stronger Shanghai futures and a softer yen in thin trade as many dealers were away for the “Obon” summer holiday season in Japan.
The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 2.9 yen, or 1.4 percent, higher at 212.9 yen ($1.9) per kg. It hit the lowest since Aug. 7 of 206.5 yen earlier in the session, hurt by slumping oil prices.
Oil prices steadied on Tuesday after sharp falls the session before to the lowest in about three weeks as a stronger U.S. dollar and a drop in Chinese refining runs hit the market.
The most-active rubber contract on the Shanghai futures exchange for January delivery rose 230 yuan, or 1.4 percent, to finish at 16,215 yuan ($2,429) per tonne, bouncing back above a key 16,000 yuan mark.
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“On top of gains in Shanghai futures, the yen’s fall to a 110 yen level lent some support,” said Hiroyuki Kikukawa, general manager of research at Nissan.
The dollar rose 0.6 percent to 110.26 yen, pulling away from a low of 108.72 yen set on Friday, its lowest level since April 19. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
“I think the TOCOM is still on the recovery course after hitting lows in June, with hopes that Chinese economy will stay healthy ahead of an autumn congress of the Communist Party of China despite the recent weak data,” Kikukawa said.
China’s strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree.
“Still, the Tokyo market could stay subdued this week for Obon season unless North Korea fires missiles,” Kikukawa said.
North Korea’s leader has delayed a decision on firing missiles towards Guam while he waits to see what the United States does next, the North’s state media said on Tuesday, even as South Korea’s president said Seoul would seek to prevent war by all means.
The front-month rubber contract on Singapore’s SICOM exchange for September delivery last traded at 151.5 U.S. cents per kg, up 0.9 cent.
($1 = 110.3200 yen)
($1 = 6.6760 Chinese yuan)
(Reporting by Yuka Obayashi; Editing by Biju Dwarakanath)
