Asian rubber futures settled higher Wednesday as investors scrambled to cover their shorts amid strong demand in China, tight supply in physical trading and a rebound in global financial markets, said trade participants.
Many investors covered their short positions ahead of a public holiday in Japan Thursday.
As the wintering season continued to spread across highlands of Thailand's rubber growing region, daily availability of USS3 raw material in the country's three central markets again totaled below 100 metric tons.
In a role reversal, rubber factories are offering STR20 rubber at a $50/ton premium to RSS3 grade at $3,100/ton because they don't have enough raw material for processing to meet demand from importers.
The benchmark July contract on Tocom settled Y6.3 higher at Y276.5 a kilogram, breaching psychological resistance at Y275/kg--a strong recovery after falling below Y266/kg Tuesday.
Prices continued to rise in the night session, with the July contract settling at Y278.1/kg. Night session prices aren't included in intraday trading.
"There may be some short covering involved," said a Tokyo-based trading executive.
In the last few weeks, as prices tumbled from around Y306/kg to below Y266/kg, many investors had set up short positions.
Ahead of Thursday's holiday, as prices recovered, many investors closed these positions and booked profits.
Positive data from China also boosted market sentiment.
China's natural rubber imports in January rose 190% on year to 170,000 tons, according to the latest data from the government.
China's auto sales surged to a monthly record of 1.66 million vehicles in January, more than double from a year earlier, extending last year's strong gains.
Natural rubber futures on the Shanghai Futures Exchange settled CNY605 higher at CNY22,780/ton.
The benchmark September contract on the Agricultural Futures Exchange of Thailand settled THB2.40 higher at THB101.1/kg, rising above the crucial THB100/kg psychological mark again.
Asian physical rubber prices were higher as factories raised offers due to tight supply of raw material such as latex, USS3 and cup lumps.
(Source: irco.biz)
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