Tokyo rubber futures climbed nearly 2 percent to a two-week high on Tuesday in an extension of the previous day's rally, with a rise in other commodities such as gold continuing to provide support. The benchmark Tokyo Commodity Exchange rubber contract for August delivery rose as high as 272.0 yen per kg, up 5.2 yen or 1.95 percent from Monday's close.
It was the highest for a lead contract since a March 7 peak of 272.3 yen. It was trading a touch down at 269.8 yen. On the physical front, supplies remain tight due to a seasonal decline in output from leading producers such as Thailand, although traders expect to see more shipments soon from Indonesia as the rainy season draws to a close.
Sellers were bullish due to the supply tightness but there were few buyers, leading to a quiet market. "Producers are also sidelined due to a shortage of raw material supply," one trader in Singapore said.
Physical rubber prices were estimated to be up 1-3 cents per kg in line with TOCOM's rise. Some potential sellers, however, were likely to offer rubber at even higher levels, traders said. Some sellers said they would be offering Malaysian SMR20 grade rubber at about $2.13-$2.14 per kg, compared to an assessment of about $2.09. The benchmark TOCOM February gold contract has risen as high as 2,514 yen per gram, up 16 yen from Monday's close.
Elsewhere bullish news was heard from China, already the world's largest rubber consumer and importer. A senior Chinese industry official said on Tuesday that the country would continue to see double-digit annual growth in rubber consumption and imports through 2010, as strong growth in tyre exports outpaces moderate gains in domestic rubber output.
Fan Reined, vice-chairman of the China Rubber Industry Association (CRIA), told a conference that China was expected to consume 5.05 million tonnes of rubber this year, including 2.35 million tonnes of natural rubber. "China's reliance on the world market for natural rubber will become heavier and heavier," he said. China was expected to import 1.75 million tonnes of natural rubber in 2007.