Tokyo rubber futures held steady on Thursday on firmer oil, but the most active contract was within sight of a two-week low hit the previous day as worries about increasing supplies in producing countries lingered.
The physical sector saw overnight deals for Indonesia's SIR20 as well as Thailand's RSS3 and STR20 grades as consumers took advantage of a price drop to stock up, dealers said.
The benchmark contract on the Tokyo Commodity Exchange, currently January 2008, ended the morning session 0.2 yen per kg higher at 255.0 yen, having fallen to as low as 253.5 yen on Wednesday the lowest for any benchmark since July 25. "There's some technical buying, but it may be hard to sustain the gains because of the low volumes," said a dealer in Thailand's southern city of Hat Yai.
"We may see a short-term rebound, but it looks like the downside is there," he said. There is psychological support of 250 yen, a 6.5 percent retreat from a five-week high of 267.5 yen marked last week, for the January contract, which is hovering below the 100-day moving average of 272.9 yen.
Supplies of latex have picked up in Thailand and Malaysia after rains in the region subsided. The dry wintering season was underway in the southern part of Indonesia's main growing island of Sumatra, but had not yet disrupted supply.
Oil rebounded above $72 on Thursday as an unexpectedly sharp fuel stockdraw in the world's largest energy consumer overshadowed worries about a slowing US economy.
In the physical sector, Goodyear Tire and Rubber Co bought Indonesia's SIR20 at 94.00 US cents per pound ($2.07 a kg) for October shipment late on Wednesday. Deals for September SIR20 were also done at 93.00 cents per pound and Thailand's October RSS3 at $2.13, but there were no details on the buyers.
"It looks like buyers from China also came to buy STR20. We heard deals had been done at $2.11," said the dealer in Hat Yai, referring to the world's largest consumer. On Wednesday also saw offers for SIR20 at 95.00 cents for January/February/March shipment and at 95.25 for April/May/June of 2008.
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