Asian rubber futures settled sharply higher Tuesday after reaching a fresh 15-month high tracking strong support from crude oil and Malaysia's significant 14% downward revision of its 2009 production estimates to its lowest level in a decade.
Physical prices of the Thai USS3 raw material rose above THB88 as total arrivals in the three central markets fell below 100 metric tons for the second successive day. During this time of the season arrivals are usually above 200 tons.
The benchmark June RSS3 contract on the Tokyo Commodity Exchange settled Y2.2 higher at Y286.2 a kilogram after reaching an intraday high of Y289.4, a level not seen since late September 2008.
Prices were steady during the night session, with the June contract ending at Y287.7. Night session prices aren't included in intraday trading.
"Due to a severe winter there's strong demand for heating oil, which is pushing up crude oil prices," said a Hat Yai-based trading executive, adding rubber has been tracking higher crude oil.
Speculative short covering is pushing up prices, said a Tokyo-based broker.
After Malaysia's downward revision of production estimates, India has replaced it as the world's third-largest natural rubber producer for 2009.
Malaysia's 2009 natural rubber output is the lowest since 1999, when production was estimated at 768,900 tons, and is at 820,000 tons or lower for only the second time in two decades.
The country exported only 13,000 more tons of natural rubber than it imported in 2009, but it also exported an estimated 398,514 tons of compound rubber, up from 272,174 tons in 2008.
Natural rubber exports were down 24% in 2009 to an estimated 696,000 tons, due in part to the rise in compound rubber exports.
In other news, China's compound rubber imports exceeded 1.0 million metric tons for the first time in 2009 due to the zero tariff on supplies from some major exporters.
Its compound rubber imports were almost double from the previous year. Malaysia's exports of compound rubber, containing 97%-99.5% natural rubber, rose sharply to take advantage of China's zero import tariff on the product.
The benchmark May contract on the Shanghai Futures Exchange settled 0.6% higher at CNY24,730/ton.
The benchmark August contract on the Agricultural Futures Exchange of Thailand settled THB1.05 higher at THB101.50/kg.
Asian physical rubber prices were higher as suppliers jacked up rates, taking cues from bullish futures and the tight supply in Malaysia.
"The market is bullish, and many buyers are still making purchases as they think it is only a matter of time before prices rise above $3,000/ton," said an exporter in Singapore.
Thai STR20, a premium grade, was sold to a dealer in Singapore at $2,960/ton, free on board for February shipment, said a trader in Phuket. Malaysia's SMR20 grade was sold at $2,950/ton, CIF for January shipment to China, said an exporter in Singapore.
(Source: irco.biz)
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