[03 Dec] Asia Rubber Futures Settle At 14-Month High on Strong Fundamentals

Asian rubber futures settled higher Wednesday, reaching their highest level in 14 months on continuing concern over supply from Thailand and Indonesia and tracking other asset classes including gold and crude oil, said trade participants.

Physical prices of USS3 grade raw material in the central markets of Thailand again traded above THB82 a kilogram despite a rise in market arrivals after several days of rain-hit supply. Some factories even offered to buy at prices above THB84 to replenish their stocks.

The benchmark May RSS3 contract on the Tokyo Commodity Exchange settled Y6.3 higher at Y255.6 a kilogram after reaching an intraday high of Y257.2/kg.

Prices were steady during the night session, and the May contract ended at Y255.7/kg. Night session prices aren't included in intraday trading.

"Strong fundamentals and speculative activity are driving up prices," said a broker in Tokyo.

Expectation of a likely fall of at least 12% in Thailand's output this year to multi-year lows is also supporting prices.

"If prices of other commodities fall, rubber still keeps steady because of its strong fundamentals," said an executive at a commodities brokerage in Japan.

However, a rise in other commodities pushes rubber futures higher, he added 

Nymex light, sweet crude for January delivery settled 1.4% higher overnight at $78.37 a barrel and held steady in Asian trading. Spot gold notched a fresh record high above 1,215/oz in AsiaWednesday.

But traders cautioned that the market is ripe for another round of correction before buying resumes again.

They said prices could fall below Y255/kg before rising above Y260/kg.

The benchmark July RSS3 contract on the Agricultural Futures Exchange of Thailand settled THB2.60 higher at THB94.95/kg.

The benchmark March contract on the Shanghai Futures Exchange settled CNY290 higher at CNY22,015/ton.

Asian physical rubber prices were higher on buying interest and gains in futures markets.

Chinese buyers purchased 200 tons of RSS3 grade rubber at $2,810/ton, CIF basis, for January shipment, said an executive at a Thailand-based rubber company, adding STR20 grade sold at $2,790/ton, CIF Chinese ports.

(Source: irco.biz)