business
Tokyo rubber surges to 3-month high on growing risk appetite
Rubber rises for a fourth straight session helped by tight supply. – Reuters pic, March 4, 2016.Benchmark Tokyo rubber futures surged to a 3-month high on Friday as risk appetite grew on the back of a recovery in commodity prices and strong price momentum, helping it mark its biggest weekly gain since May 2013.
The Tokyo Commodity Exchange (Tocom) futures, which set the tone for tyre rubber prices in Southeast Asia, rose for a fourth straight session, aided by tighter supply due to the wintering season in Southeast Asia and export cuts by top Asian producers.
"On top of the recent recovery in commodity prices and equities, lower supply from Southeast Asia helped improve investor sentiment," said Jiong Gu, analyst at Yutaka Shoji Co.
Rubber is tapped year round but latex output drops during the dry wintering season, when trees shed leaves. Wintering in Thailand and Malaysia lasts from February to April.
Asia's top rubber producers are cutting exports by 615,000 tonnes for six months from March in an effort to lift prices that have tumbled amid excess supply to their lowest since the global financial crisis.
The rubber contract for August delivery finished 9.9 yen, or 6%, higher at 174.6 yen (US$1.53, RM6.26) per kg. It earlier touched a high of 174.7 yen, the highest since December 8, and marked its biggest 1-day gain since May last year.
For the week, it recorded a 12.2% jump – its biggest weekly gain since May 2013.
Crude futures rose in Asian trade on Friday, buoyed by renewed optimism prices may have bottomed out after official US data showed oil production fell to its lowest level since November 2014.
London copper was set to post its biggest weekly advance in about six months on Friday as signs of bottoming in oil and a brighter US economy fuelled investor appetite for metals.
Asian shares looked set on Friday to post their strongest week in five months as global investors returned to riskier assets after a string of positive US economic data and a bounce in oil and commodity prices.
"Price momentum was lifted after the benchmark broke a 160 yen ceiling. I expect the Tocom contract to try 180 yen soon, then it may see profit-taking before heading for 190 yen," Yutaka's Gu said.
The most-active rubber contract on the Shanghai futures exchange for May delivery surged 640 yuan to finish at 11,310 yuan per tonne, hitting the highest since last October.
The front-month rubber contract on Singapore's SICOM exchange for April delivery last traded at 132.0 US cents per kg, up 8.9 cents. – Reuters, March 4, 2016.
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