Tokyo rubber futures rebounded on Wednesday as players returned to the market after a holiday but the physical sector lacked activity, with producers still struggling to attract buyers despite tight supplies.
The benchmark August TOCOM rubber contract on the Tokyo Commodity Exchange, the global trend-setter for rubber, closed 1.1 yen per kg higher at 245.5 yen ($2.09). The contract had fallen 2.9 yen to 244.4 yen on Monday.
"I think TOCOM is a bit undervalued and we may see a bit of a correction there," said a dealer in Singapore. The most active contract in Tokyo futures has lost more than 10 percent in value since rallying to 274.9 yen per kg on February 6 the highest since February 1984 as investors unwound positions amid declines in global commodities prices.
Supply tightness in main producer Thailand has been a key reason for TOCOM's Bull Run and many dealers remained bullish on rubber as the wintering season kicked in. But a rebound in Japan had little impact on physical prices on Wednesday as tyre makers took to the sidelines, waiting for more leads, dealers said. "The tyre makers were bidding at very low prices, so I can't think of any deals," said the Singapore dealer.
"We would expect the price to go up because of wintering. Its' wintering in northern Sumatra, southern Thailand and northern Malaysia," said the dealer, referring to a period when trees shed leaves and yields are low.
Indonesia's tyre-grade SIR20 was unchanged at between 85.00 and 85.25 US cents per pound ($1.87 and $1.88 a kg) free on board Plumbing in South Sumatra. May SIR20 was offered between 85.25 cents and 85.50 FOB Begawan port, little changed from Tuesday.
Thai benchmark RSS3 rubber sheet for May shipment was also unchanged at $2.04 a kg, while Malaysia's SMR20 barely moved at between $1.91 and $1.94 a kg for nearby shipments. The Shanghai futures exchange tracked gains in Tokyo. The most active June rubber contract rose 175 yuan per tonne to 20,200 yuan.