Benchmark Tokyo rubber futures soared to a 6-1/2-month high on Monday, extending gains into a fifth straight session, as risk appetite grew after oil prices continued to recover and as fears over slowing growth in the Chinese economy eased, dealers said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for August delivery finished up 4.9 yen or 2.8% at 179.5 yen (US$1.58) per kg, after rising to as much as 184.6 yen earlier, the highest since Aug 24.
Oil prices rose on Monday, extending a rally that has lifted crude benchmarks by more than a third from this year's lows, as tightening supply and an improving global outlook strengthened the sentiment for a market recovery.
"Worries over slowing demand in China have somewhat receded, after the government confirmed the country would aim for an economic growth rate of 6.5 percent or higher this year," said Satoru Yoshida, commodity analyst at Rakuten Securities.
In 2016, Beijing will aim for an economic growth rate of 6.5%-7%, as Reuters previously reported, according to a series of draft reports ahead of the opening of the 12-day parliament.
"TOCOM came off from the peak after Shanghai futures gave up some early gains, but the market is expected to keep a strong tone, as the contract managed to end above the close of Friday's evening trade," Yoshida said, predicting the benchmark to head toward 200 yen.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, finished Friday's evening trade, which is counted as part of Monday's trade, up 3.0 yen at 177.6 yen, after jumping 12.2% last week — its biggest weekly gain since May 2013.
The most active rubber contract on the Shanghai futures exchange for May delivery surged 635 yuan to finish at 11,705 yuan (US$1,796.49) per tonne, surrendering some of its earlier gains, after hitting a high of 12,065 yuan.
The front-month rubber contract on Singapore's SICOM exchange for delivery last traded at 135.0 U.S. cents per kg, up 2.8 cents.
