TOKYO (April 11): Benchmark Tokyo rubber futures soared more than 4% on Monday, bouncing from a one-week low, as a spike in oil prices on Friday fed appetite for risk while stronger Shanghai futures also lent a support.
The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery <0#2JRU:> finished 8.2 yen, or 4.6%, higher at 185.2 yen (US$1.72) per kg, marking its biggest one-day gain in around five weeks.
It earlier surged to a high of 186.9 yen, the highest since last Wednesday when the prices touched a 7½-month high.
Oil prices rose more than 6% on Friday as drawdowns in US crude stockpiles fed hopes that a punishing global oversupply may be approaching a tipping point after nearly two years, though they dipped on Monday as Goldman Sachs poured cold water on the prospects of a planned oil producer meeting successfully reining in global oversupply.
Goldman cautioned that the results of the meeting, planned in Qatar for April 17, may end up being bearish for the market.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, fell to a low of 175.6 yen last week, but quickly rebounded on Monday to above the 180-yen level, amid hopes for a recovery in demand in the world’s top buyer China.
China’s economic indicators showed signs of improvement in the first quarter but a sluggish world economy and volatile markets deprive the changes of a solid basis, state television quoted Premier Li Keqiang as saying on Friday.
“The TOCOM prices got lifted by jumping Shanghai futures following a recovery in local spot prices on anticipations for demand pick-up in China and slower output in Southeast Asian producers due to bad weather,” a Tokyo-based dealer said.
The most-active rubber contract on the Shanghai futures exchange for September delivery surged 690 yuan to finish at 12,220 yuan (US$1,889.89) per tonne.
On the downside, the dollar fell as far as 107.63 yen on Monday, surpassing last week’s trough of 107.67 to reach a fresh 17-month low and extending last week’s 3.3% drop. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
“But with hopes of a recovery in China’s demand, the TOCOM rubber is likely to try last week’s high of 188.4 yen again,” the dealer said.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 147.7 US cents per kg, up 7.3 cent.
(US$1 = 107.7400 yen)
(US$1 = 6.4660 Chinese yuan renminbi)
