BANGKOK, Jan 5 (Reuters) – Strong demand from China ahead of
the Lunar New Year holiday at a time of limited supply and firm
oil prices looks set to support Tokyo rubber futures in January,
a Reuters poll showed on Tuesday.
The benchmark six-month rubber contract on the Tokyo
Commodity Exchange , currently June 2010, could hit 285.0
yen ($3.09) per kg by the end of January, according to a median
forecast of 10 analysts and dealers polled by Reuters.
This is 15 percent above the previous forecast of 247.5 yen
per kg in a similar poll in early December.
TOCOM’s most active contract rose as high as 289.4 yen a kg
on Tuesday, its strongest level since September 2008, in a rally
driven by strong oil prices. [RUB/T]
“Prices will remain firm at the beginning of the year, as
people anticipate buying from China ahead of the Lunar New Year.
It is typically a time when prices tend to rise,” said Kazuhiko
Saito of Fujitomi Co Ltd.
Supply has been falling since November 2009 as unseasonal
rains hit Thailand and Malaysia, the world’s biggest and
third-biggest producers, disrupting tapping, while Indonesia has
been hit by dry weather, traders said.
“January is the only period when supply should get back to
normal, but that is unlikely to help meet rising demand as
Chinese buyers are expected to buy a lot of rubber before taking
their long holiday in February,” said a trader in Thailand’s Hat
Yai rubber centre.
China, the world’s biggest rubber consumer, is expected to
import more rubber sheets in 2010 as the government cuts rubber
import tariffs in its bid to help domestic tyre makers who have
enjoyed increasing demand due to strong car sales.
[ID:nTOE5BF04L]
Supply is expected to fall again during the wintering dry
season, starting from late February until mid-April, when rubber
trees shed their leaves and stop producing latex, traders said.
Apart from fundamental factors, strong oil prices are likely
to provide support to TOCOM rubber as it makes alternative
synthetic rubber expensive and usually encourages the use of
natural rubber.
“I expect oil prices to remain strong and oil at around
$75-$80 would encourage funds to keep buying rubber futures,” one
dealer said.
Oil edged up towards $82 a barrel on Tuesday, the ninth
straight day of gains, as a surprise cold snap in the key
consuming regions of the United States and Europe boosted demand
for heating fuel. [ID:nSGE604012]
With strong support from both fundamental and technical
buying, boosted by firm oil prices, TOCOM rubber is expected to
rise to 292.5 yen per kg by the end of February, according to the
poll.
Dealers expect profit-taking to kick in if prices move
towards the key psychological level of 300 yen.
“Prices usually face some correction after a fast rise and I
think TOCOM is rising too fast right now. TOCOM could face a
correction in the near future,” a Singapore-based trader said.
On the physical front, rubber prices are expected to remain
firm as supply is likely to fall short of demand during January.
The benchmark Thai RSS3 as well as Malaysia SMR20 are
forecast to be at $3.0 per kg by the end of January, slightly
higher than the $2.92 per kg quoted for Thai RSS3 and $2.88 per
kg quoted for Malaysia SMR20 at end-December.
Indonesia SIR20 is expected to be at $2.92 per kg, up from
around $2.88 per kg at the end of December, the poll showed.
Forecasts for TOCOM sixth-month rubber prices in yen per kg:
end-January end-February
Median 285.0 292.5
Lowest 255.0 250.0
Highest 300.0 355.0
1. Unattributable 280-290 300
2. Supara Rubber 275-280 280
3. CV Roben 255-280 265-300
4. Unattributable 280-290 280-290
5. Fujitomi Co Ltd 270 250
6. D.S. Futures 300 355
7. Unattributable 280-290 280-290
8. A.T.S. Rubber 300 310
9. Unattributable 290 300
10. Unattributable 285 300

Forecasts for Thai RSS3 in U.S. dollar per kg:
end-January end-February
Median 3.00 3.10
Lowest 2.90 2.90
Highest 3.00 3.50
1. Unattributable 3.00 3.50
2. Supara Rubber 3.00 3.10
3. Unattributable 2.90-2.95 2.90-2.95
4. A.T.S. Rubber 3.00 3.10
5. Unattributable 3.00 3.10
6. Unattributable 3.00 3.10

Forecasts for Thai STR20 in U.S. dollar per kg:
end-January end-February
Median 3.00 3.05
Lowest 2.85 2.85
Highest 3.00 3.20
1. Unattributable 3.00 3.20
2. Supara Rubber 3.00 3.00
3. Unattributable 2.85-2.90 2.85-2.90
4. Unattributable 2.90 3.00
5. Unattributable 3.00 3.10
6. Unattributable 3.00 3.10

Forecasts for Malaysia SMR20 in U.S. dollar per kg:
end-January end-February
Median 3.00 3.00
Lowest 2.85 2.85
Highest 3.00 3.10
1. Unattributable 3.00 3.00
2. Supara Rubber 3.00 3.00
3. Unattributable 2.85-2.90 2.85-2.90
4. Unattributable 2.90 2.90
5. Unattributable 3.00 3.10
6. Unattributable 3.00 3.10

Forecasts for Indonesia SIR20 in U.S. dollar per kg:
end-January end-February
Median 2.92 2.94
Lowest 2.69 2.76
Highest 3.00 3.10
1. Unattributable 3.00 3.00
2. Supara Rubber 2.98 3.00
3. CV Roben 2.69-2.91 2.76-2.98
4. Unattributable 2.85-2.90 2.85-2.90
5. Unattributable 2.85 2.85
6. Unattributable 2.95 3.10

($1=92.27 Yen)

Source: Reuters

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