TOCOM ends up on worries over shortage

Benchmark Tokyo rubber futures ended up 1.3 percent on Tuesday, following a near 4-percent tumble the previous day, buoyed by worries over supply shortages and a weaker yen.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, hit a near 16-month high of 211.7 yen on Monday, while Shanghai futures hit the highest since June 2015 amid supply shortages in Asia, such as Indonesia, Thailand and Vietnam, sources said.

To tap growing demand, Goodyear Tire & Rubber Co said earlier this month that it will expand the capacity of its tire factory in China. When completed in 2020, the expansion will increase the plant's capacity by about 5 million tires a year, the company had said.

"We're moving to peak production. November, December and January are peak production time, and if raw material doesn't come out soon, the bull momentum will certainly be sustainable. Raw material output is way off last year's output," said a Singapore-based trader.

The dollar traded within sight of its highest level in more than 13-1/2 years on Tuesday as bond yields soared on expectations that President-elect Donald Trump's economic policies will fuel inflation. 

A weaker yen makes yen-denominated commodities cheaper for holders of other currencies.The Tokyo Commodity Exchange rubber contract for April delivery <0#2JRU:> finished 2.6 yen higher at 200.3 yen ($1.85) per kg.

Meanwhile, the most-active rubber contract on the Shanghai futures exchange for January delivery fell 150 yuan to finish at 15,620 yuan ($2,277) per tonne, amid continued profit-taking on Monday's high.

The front-month rubber contract on Singapore's SICOM exchange for December delivery last traded at 163 U.S. cents per kg, down 3 cents. ($1 = 108.2100 yen) ($1 = 6.8597 Chinese yuan)