TOCOM steady as weak yen offsets sluggish oil price

TOKYO: Benchmark Tokyo rubber futures ended steady on Thursday as support on the back of a weaker yen against the dollar was offset by sluggish oil prices.

The dollar hit an 11-month high against the yen and stood tall against its other peers on Thursday, boosted by a spike in Treasury yields following upbeat U.S. data and comments from Federal Reserve Chairman Jerome Powell that were seen as hawkish.

A weaker yen makes commodities denominated in the Japanese currency cheaper for holders of other currencies.

But oil prices slipped from four-year highs reached in the previous session, pressured by rising U.S. inventories and after sources said Russia and Saudi Arabia struck a private deal in September to raise crude output.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for rubber prices in Southeast Asia, on Wednesday hit a one-month high on bullish oil prices amid concerns about dwindling supplies from Iran but have been unable to gain further amid concerns about U.S-China trade frictions.

"Concerns about slowing U.S. and Chinese economy are expected to hit tyre manufacturers," said a Japanese brokerage source.

The Tokyo Commodity Exchange rubber contract for March delivery  finished unchanged at 169.5 yen  ($1.48) per kg.

Inventories of ribbed smoked sheet (RSS) rubber at warehouses in and around Tokyo monitored by TOCOM fell by 372 tonnes to 10,160 tonnes as of Sept. 20, from 10 days earlier, the exchange said on Thursday.

On Oct. 9, TOCOM will launch new technically specified rubber (TSR) futures to meet growing demand for the product.

Rubber consumers, particularly tyre makers, have started to prefer TSR, which is largely machine produced and is considered a more consistent product, to the smoked sheets, which are put together by hand and can have some variance in quality.

"Singapore's TSR is mainly linked with the Indonesian product, but our TSR meets the product standard in Thailand, the world's biggest natural rubber producer," TOCOM Chief Executive Officer Takamichi Hamada said in an interview.

It will likely attract Thai producers and shippers as well as buyers in China, the world's biggest rubber consumer, for hedging and arbitrage, he added.

The front-month rubber contract on Singapore's SICOM exchange for November delivery last traded at 133.2 U.S. cents per kg, down 0.2 cent.

China's financial markets are closed this week for the National Day holiday.  ($1 = 114.3100 yen)