TOCOM extends gains on falling rubber stocks

Benchmark Tokyo rubber futures extended gains on Friday, ending the week with a modest rise, as a decline in Japanese rubber stocks and the Nikkei's rise to a 15-year high helped improve market sentiment.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, have been grappling with worries over Chinese demand as well as the start of wintering season, which temporarily reduces supplies, in some parts of major producers in Southeast Asia.

Wintering is a period when rubber trees become drier, resulting in lower yields.

The Tokyo Commodity Exchange rubber contract for August delivery finished up 2 yen at 213.3 yen per kg, its highest settlement since March 5.

For the week, the benchmark contract ended up 1.6 percent, recovering from a 5-week low hit mid-week.

Crude rubber inventories at Japanese ports stood at 12,267 tonnes as of Feb. 28, down 1.8 percent from the last inventory date, data from the Rubber Trade Association of Japan showed on Friday.

"Despite less liquidity, the market sentiment was firm after news of a decline in Japanese rubber stocks," said a Tokyo-based broker. "The strength in equity market and the fact that wintering has begun in producing regions all provided support."

The US dollar was quoted around 121.47 yen, compared with around 121.27 yen on Thursday afternoon. Shares of Indian tyre makers fell on reports that the government plans to raise import duty on natural rubber.

The most-active rubber contract on the Shanghai futures exchange for September delivery fell 60 yuan to finish at 12,735 yuan per tonne.

The front-month rubber contract on Singapore's SICOM exchange for April delivery last traded at 143 US cents per kg, up 0.3 cent.