Benchmark Tokyo rubber futures closed higher on Wednesday as a temporary rally in Shanghai futures prompted short-covering towards end of trade, but the rise may be short-lived going into Thursday as Shanghai pared gains to end weaker, dealers said.
Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, dropped to 216.6 yen in early trade as investors took profits on concerns Shanghai futures could decline after recent gains.
The TOCOM rubber contract for August delivery, however, closed 0.4 percent higher, gaining in late trade to end at 219.5 yen, up 0.8 yen from Tuesday's close.
"The TOCOM market was following Shanghai futures all day. A flurry of short-coverings in the wake of Shanghai turnaround boosted TOCOM towards the end of trade," Jiong Gu, analyst at Yutaka Shoji Co said.
"But the gain may be short-lived as Shanghai futures came off again after TOCOM's close," he said.
The benchmark rubber contract for May delivery on the Shanghai futures exchange fell 310 Yuan to close at 13,400 Yuan ($2,137) per tonne. The most active September delivery contract ended down 50 Yuan, at 12,935 Yuan.
Falling inventories in Japan, due in part to purchases by the Chinese government for its reserves and by Thailand to help support prices, were also behind the rise in prices, Gu added.
Crude rubber inventories at Japanese ports stood at 12,489 tonnes as of February 20, down 3.1 percent from the last inventory date, data from the Rubber Trade Association of Japan showed on Monday.
The front-month rubber contract on Singapore's SICOM exchange for April delivery was trading at 142.8 US cents per kg, up 0.5 cent.
