TOKYO (April 10): Benchmark Tokyo rubber futures closed up for the first time in three days on Friday, but posted a 4 percent loss for the week as market fundamentals stayed weak reflecting oversupply and worries over further weakening in Chinese demand, brokers said.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, and Shanghai futures have been grappling with dwindling prices, as sellers opted to hold on to stocks rather than chase falling prices.

Costs have been rising for producers due to the wintering season, when output of latex – the raw material for rubber – drops as trees shed leaves. The wintering period in major producers usually lasts from February to April.

The Tokyo Commodity Exchange rubber contract for September delivery <0#2JRU:> finished 1.2 yen higher at 196 yen per kg, after touching an 11-week low a day earlier.

For the week, it fell 4 percent amid worries over slowing global rubber demand, especially in China in a slowing economy.

Broker sources said heavy net long positions held by some market participants weighed heavily on the Tokyo rubber market, which was one of the reasons for this week’s fall.

“Ahead of the holidays, there were little movements and there was no change in weak fundamentals,” said an official with a Tokyo-based broker.

The U.S. dollar was quoted around 120.50 yen on Friday afternoon, compared with around 120.25 yen on Thursday.

China’s inflation data for March produced small positive surprises, but remained tepid, with little sign that Beijing’s easing measures to date have significantly cut worrisome deflationary pressure.

The most-active rubber contract on the Shanghai futures exchange for September delivery fell 25 yuan to finish at 12,350 yuan per tonne.

The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 136.6 U.S. cents per kg, down 1.6 cent.

Source: Reuters

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