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TOCOM rubber bounces back on Shanghai surge

Benchmark Tokyo rubber futures rebounded from the previous day’s loss on Wednesday, as surging Shanghai futures and higher overnight oil prices lent support, although gains were capped below a key 160 yen ceiling due to nagging worries about oversupply, dealers said.

The Tokyo Commodity Exchange‘s new rubber contract for May delivery finished at 158.1 yen (US$1.29) per kg, up 1.7 yen or 1.1% from its opening price of 156.4 yen.

It fell more than 3% the previous day.

“Strong Shanghai rubber market backed by higher stock market helped ease investors’ concerns over slowing demand in China,” said Satoru Yoshida, a commodity analyst at Rakuten Securities.

The most-active rubber contract on the Shanghai Futures Exchange for January delivery soared 550 yuan or 5.4% to finish at 10,775 yuan (US$1,686.84) per tonne.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.7% to 3,781.61, while the Shanghai Composite Index gained 0.9% to 3,647.93 points.

On the upside, crude oil futures hit two-week highs in the previous session, as tension mounted in the Middle East following Turkey’s downing of a Russian warplane, although they eased on Wednesday.

“The TOCOM rebounded today, but the price will likely remain under pressure, unless we see some bullish fundamental changes such as demand pick-up in China,” Yoshida said.

The front-month rubber contract on Singapore’s SICOM exchange for December delivery last traded at 114.8 U.S. cents per kg, up 0.3 cent.

(US$1 = 122.3700 yen)

(US$1 = 6.3877 Chinese yuan)

Reuters