TOKYO (Sept 20): Benchmark Tokyo rubber futures surged on Thursday, recovering from their lowest level in nearly two years hit earlier this week, as a rally in Shanghai futures prompted a flurry of short-covering, dealers said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for February delivery finished 3.7 yen, or 2.2%, higher at 169.6 yen (US$1.51) per kg, after hitting a 1-week high of 170.0 yen earlier in the session.
The most-active rubber contract on the Shanghai futures exchange for January delivery jumped 455 yuan to finish at 12,570 yuan (US$1,834) per tonne. It rose to 12,720 yuan, the highest in about a month, earlier in the session.
“The rubber markets have been oversold,” a Tokyo-based dealer said.
“Chinese speculators with heavy short positions started buying back after the market held up better-than-expected at near key support levels.”
That led investors in Japan to unwind their short positions, he said, adding that stronger oil prices also lent support.
Oil prices rose on Thursday after news of another drawdown in US crude inventories and on signs that OPEC may not raise production enough to compensate for the loss of Iranian exports hit by US sanctions.
“If Shanghai futures continue to climb, the TOCOM could follow the trend,” the dealer said.
The front-month rubber contract on Singapore’s SICOM exchange for October delivery last traded at 133.6 US cents per kg, up 1.5 cents.
(US$1 = 112.2600 yen)
(US$1 = 6.8547 Chinese yuan)
