Tokyo rubber up on rumours

Tokyo rubber futures closed almost 1 percent higher on Monday on concerns over supplies amid a rumour of a fire at a rubber plant in southern Thailand in the weekend and burned inventories held at the plant.
Tokyo traders said, however, the rise in Tokyo Commodity Exchange rubber futures was modest as the market focused on bearish technical after last week's losses dented sentiment.
A Tokyo trader said there was a fire at a rubber plant in Thailand's southern city of Hat Yai on Saturday. He said the fire was extinguished, but burned about 1,600 tonnes of rubber inventories at the plant that produced ribbed smoked sheets (RSS).
Traders said they were not sure whether the plant is operating. "I've heard the rumour about the fire in Hat Yai, which could be a factor to limit falls in this bearish market condition," said a senior trader at a Japanese brokerage.
"Firmness in other yen-denominated commodities could have supported TOCOM rubber, but underlying sentiment for the market is very bearish now after last week's drop," he said. The key TOCOM rubber contract for November 2007 delivery closed at a session high of 266.9 yen a kg, up 2.4 yen or 0.9 percent from Friday's close.
Its intrude low was 263.8. On Thursday, it fell to a low of 261.4 yen the lowest for any benchmark since March 19. The key contract slumped below the seven-day moving average of 267.3 yen.
It was also about 4.8 percent below the 100-day moving average of 280.3 yen. Investors worried about improving supplies in Thailand, the world's largest rubber producer, while keeping an eye on movements in other markets for direction.
"The market is clearly in a downtrend after last week's falls," said Takashi Ogura, manager of risk management at Kanetsu Asset Management. "Technical factors are now setting trends. The market is watching whether the benchmark rubber contract could keep 260 yen in the near term."
The spot June TOCOM contract expired at 268.8 yen a kg, up 1.5 yen from Friday's close, with 402 lots or 2,010 tonnes of deliveries. "The expiry came in line with expectations and was not a surprise. Sentiment for the market remains weak," Ogura said. Rubber was supported by short covering on Monday despite falling oil prices and the yen edging higher.
Benchmark London Brent crude fell by more than half a dollar to below $71 a barrel on Monday as Nigerian unions ended a strike that had threatened to disrupt oil exports.
Benchmark Brent crude for August fell 69 cents to $70.49. The contract touched a 10-month high of $72.25 a barrel early last week as dealers fretted over the potential impact of a general strike.
The yen edged up from a 4-1/2-year low against the dollar and all-time low versus the euro on Monday, but stayed pressured as the Bank of Japan, unlike other central banks, is not seen to be in a hurry to raise rates.
In the physical rubber market, prices were mixed on Monday, pressured by more supplies from Thailand. On Friday, August Indonesia SIR20 was traded at 93.50 cents per pound and September SIR20 was traded at 93.75 cents.