Key Tokyo rubber futures settled 1.1 percent higher on Tuesday after scaling a fresh lifetime high, while Shanghai futures hovered near a six-week high, as supply concerns after heavy rains in producing countries spurred fund buying. TOCOM's key rubber contract for May delivery surged to a lifetime high of 413.8 yen in regular day session trading before settling up 4.3 yen at 413.1 yen per kg.
"Trading normally slows down at this time of the year due to increasing supply from producing countries, but things are totally different this year," said Hiroyuki Kikukawa, general manager at trading house Nihon Unicom. "Investors are betting heavily in anticipation of a further decline in supply after the turn of the year, when production usually decreases," he said.
The benchmark will switch to the June contract on Wednesday. Deliveries against the December rubber futures contract on the Tokyo Commodity Exchange slipped from last month, to 150 lots or 750 tonnes, the exchange said on Tuesday. The nearby December contract expired on Tuesday at 405 yen per kg. Sixth month Tokyo rubber is expected to climb to 450 yen per kg over the next three months, based on its wave pattern, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
The most active Shanghai May rubber futures closed at 37,685 yuan a tonne on Tuesday, up from Monday's close of 37,320 yuan. Trading volume was 1.17 million lots. Indonesian rubber changed hands at historic highs of $4.872 a kg for nearby shipment, surpassing the Thai RSS3 grade by a few cents for the first time in years after persistent rains curbed supply, dealers said on Tuesday.