Shanghai rubber futures rose 3.1 percent on Friday, driven up by bargain-hunters who believe supplies could tighten as Chinese firms were likely to drawdown more domestic stocks. Traders said demand for rubber in China is seen climbing as many tyre makers have relocated their factories to the country in recent years.
"The potential demand will pick up, sooner or later," said In Hue, analyst at China International Futures Corp in Shanghai. "Stocks in Chinese end-users are low, while the country's total stock is not relatively high," Line said, referring to a total of around 150,000 tonnes of rubber in stocks held by Chinese producers, traders, end-users and the exchange.
Stocks in warehouses monitored by the Shanghai Futures Exchange rose 1,380 tonnes, or 2 percent, to 64,625 tonnes in the week ended on Thursday, the exchange said on Friday.
Reflecting the strength in Tokyo rubber futures, Chinese rubber futures have gained 8 percent this week. Shanghai's most-active March contract ended the week at 18,325 yuan ($2,342) a tonne compared with the opening of 16,975 yuan on Monday.
In Tokyo, the benchmark Tokyo Commodity Exchange rubber for May delivery closed at 214.9 yen ($1.86) a kilogram. It had reached a session high of 215.0 yen the highest for a benchmark since November 14. The TOCOM rubber contract has jumped by about 13 percent from this week's low of 190.5 yen reached on Monday.
Prices were expected to move in a range of 200.0-220.0 yen next week, traders said. Concerns about curbed exports from major suppliers have lent psychological support to rubber prices. Thailand, the world's biggest rubber producer, said it could suspend exports for a few weeks this month to help prices.
Indonesia, the second-largest producer, said it would cut exports by 10 percent next year. "It is possible for Shanghai rubber to regain the 20,000 yuan level this year if the momentum continues with supply worries," China International Futures' Line said. "It is just a conservative prediction. The Shanghai rubber still has enough upturned room for a surge next year."