Benchmark Tokyo rubber futures rose for a fifth session to hit a 2-1/2-week high on Tuesday, as some investors unwound short positions on the back of strong Japanese equities while others kept to the sidelines on lack of fresh news due to holidays in China. The Tokyo Commodity Exchange (TOCOM) rubber contract for March delivery finished 2.9 yen, or 1.7 percent, higher at 173.8 yen ($1.44) per kg. It earlier touched 174.5 yen, the highest since September 18.
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have gained 5.7 percent over the past five sessions. "Some investors were buying back contracts as the Nikkei index extended its gains and brightened market sentiment," said Toshitaka Tazawa, an analyst at Fujitomi Co.
Chinese financial markets are closed until October 7 for national holidays, and will reopen on October 8. The front-month rubber contract on Singapore's SICOM exchange for November delivery last traded at 125.3 US cents per kg, up 0.8 cent. Japan's Nikkei stock index ended up 1 percent, extending its rebound from an eight-month low hit a week ago, as risk appetite increased on news of a basic agreement on the Trans-Pacific Partnership trade pact.
Twelve Pacific Rim countries including the United States, Japan and Canada reached the most ambitious trade pact in a generation, though some analysts say the benefits of the far-reaching plan are far from clear at this point. "Investors also felt safe to cover short positions as they don't have to worry about Chinese stock prices that frequently weigh on rubber prices," Tazawa said. "If Shanghai rubber futures get a boost when the market reopens on Thursday, TOCOM may carry on the positive trend," Tazawa added.