TOCOM hits 1-1/2-week high on trade optimism, posts 3rd weekly gain

Benchmark Tokyo rubber futures rose to a 1-1/2-week high on Friday, amid optimism that the United States and China are closer to resolving their trade dispute and speculations over tighter supply in Tokyo’s near-term contracts, dealers said.

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the next round of trade negotiations with Washington, China’s commerce ministry said on Thursday, confirming earlier reports of the planned talks.

The progress in US-Sino trade talks stirred hopes of a deal in their tariff war, dealers said.

The Tokyo Commodity Exchange (TOCOM) rubber contract for June delivery finished 1.4 yen higher at 186.2 yen ($1.7) per kg, after touching the highest since Jan. 9 at 186.4 yen earlier in the session.

The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, rose 1.5 percent for the week, marking a third straight weekly gain.

“Since many rubber inventories have expired last month, investors expected tighter supply, especially in the January and February contracts, which has helped bolster rubber prices this month,” a Tokyo-based dealer said.

“There are also speculations that top rubber producers will meet to talk about measures to help shore up prices later this month although we don’t know if that’s really happening and if they could agree on any specific steps,” the dealer said.

TOCOM’s technically specified rubber (TSR) 20 futures contract for July delivery rose 0.5 percent to close at 153.2 yen per kg.

The most-active rubber contract on the Shanghai futures exchange for May delivery rose 30 yuan to finish at 11,660 yuan ($1,722) per tonne.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange were unchanged, the exchange said on Friday.

The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 134.6 US cents per kg, up 1.2 percent.