TOKYO: Japanese rubber futures rose on Monday as traders covered short positions and bargain hunters waded in after recent sharp losses, while an export ban by a major African rubber producer tightened the supply outlook.
The Osaka Exchange (OSE) rubber contract for December delivery was up 9.6 yen, or 2.34 percent, at 419.9 yen (USD2.59) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery rose 200 yuan, or 1.2 percent, to 16,910 yuan (USD2,489.91) per metric ton.
The most active September butadiene rubber contract on the SHFE strengthened 300 yuan, or 2.51 percent, to 12,240 yuan per metric ton.
Fresh buying interest and short covering following the recent sharp decline supported prices, with consumers continuing to pay premiums of 10 to 20 cents per kg over SICOM futures for imminent deliveries, signalling firm physical demand, Japan Exchange Group said in a report on Monday.
The recent steep selloff appeared to be driven more by speculative positioning than by a deterioration in fundamentals, said a Singapore-based rubber trader.
With the market readjusting, fundamentals remain supportive of higher prices given current breakeven levels, the trader said.
Supply concerns lent additional support.
President Boakai of Liberia, one of Africa’s leading rubber producers, imposed a ban on exports of raw natural rubber, including latex and other unprocessed forms, according to Japan Exchange Group and local media reports.
With overall existing inventory levels already thin, any reduction in raw rubber availability from the region could tighten near-term supply for processors, said another rubber trader who spoke to Reuters on condition of anonymity.
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