[09 Jan] Asia Rubber Futures Settle Up; Rebound On Unseasonable Thai Rains

Asian rubber settled mostly higher Friday, bouncing back on strong fundamentals as rains hit supply in Thailand and on speculative buying due to a weaker yen, said trade participants.

Physical prices of Thai USS3 raw material were steady above THB90 a kilogram as unseasonable rains are affecting market arrivals in the three central markets.

The benchmark June RSS3 contract on the Tokyo Commodity Exchange settled Y2.8 higher at Y291.7/kg, off an intraday low of Y287.5.

Prices rose further during the night session, and the June contract ended at Y294.6. Night session prices aren't included in intraday trading.

Initially, prices fell on profit taking as investors liquidated positions ahead of the long weekend, but many among them went long again. Markets in Japan are closed Monday for a public holiday.

The market is being pulled by conflicting leads, said an analyst in Singapore.

He said the weaker yen was supportive but there was downward pressure from profit taking and speculation that China may curb liquidity in its economy.

The U.S. dollar was hovering around Y93.45 during Asian trading hours, up from an intraday low of Y93.11.

"Crude oil, though slightly lower, is still above $82/bbl and rubber's fundamentals are also strong," said a Tokyo-based broker.

He said rubber prices may rise toward Y300/kg next week.

In other news, rubber trading and exporting companies in Thailand have delayed shipments to Kumho Tire Co. due to concerns over future payments, said trading executives.

"Shipments for this month are still pending. We're still negotiating with them but can't disclose the details," said a Phuket-based trading executive, who didn't want his company to be named.

The executive said his company on average exports more than 1,000 metric tons of natural rubber to Kumho Tire each month.

Earlier this week, Pongsak Kerdvongbundit, managing director of Von Bundit Ltd., one ofThailand's biggest producers of natural rubber, told Dow Jones Newswires his company will ship cargoes to Kumho only if banks can guarantee payments.

The benchmark May contract on the Shanghai Futures Exchange settled 0.3% lower at CNY25,015/ton. China is world's largest consumer of rubber.

Natural rubber inventories in warehouses recognized by the Shanghai Futures Exchange rose 1.0% in the week to Thursday to 146,333 tons.

The benchmark August contract on the Agricultural Futures Exchange of Thailand settled THB1.0 higher at THB102.50/kg.

Asian physical rubber prices were steady on strong fundamentals.

"Factories in Thailand are reluctant to make large offers of rubber because raw material supply is limited," said an exporter in Bangkok.

He said unseasonable rains have affected market arrivals of latex and USS rubber. Thai exporters sold STR20 rubber at $3,040/ton, CIF, for prompt shipment to buyers in China.

(Source: irco.biz)