TOCOM Rubber regains on technical buying

Analysis of Tokyo Rubber Market
The market sharply rebounded from the previous losses and finished the session at 378.0 yen, gaining 7.6 yen, due to technical buying above 375.3 yen and firmer Shanghai rubber market. During the night session, 373.0 yen remained strong resistance so the market stabilized in a small range around 372 yen level without a clear direction, which finally closed at 371.5 yen.
The latest U.S. unemployment statistics was released last Friday and it showed badly at 9.80% that weakened USD against major currencies, and, hence, stronger oil prices and firmer yen offset each other at the opening.
The day session resumed trading even higher at 373.2 yen due to stronger oil prices overwhelming firmer yen and moved in a tiny range amid selling on rally at 374.0 yen and buying on dip at 372.5 yen after opening.
While the market stabilized during the most of the session on the back of steady Shanghai rubber market, technical buying by funds and short covering by speculators suddenly pushed up the market as it broke above 375.3 yen, at which the nearest high price marked in November 22nd stood, and reached to the day’s high at 378.8 yen afterward. Buying interest kept firmer toward closing.
The Shanghai rubber market is mostly quiet and hovered at the opening price level throughout the session. It finally ended at 32,835 yuan with a gain of 815 yuan. The market broke the recent high of 375.3 yen and soared as high as 378.8 yen, next target price will be a psychological resistance of 380.0 yen at an immediate front.
Since technical indicators show that the market is currently not that overbought and the spread for TOCOM rubber against both Shanghai rubber market and SICOM remains normal, bullish note could still be expected.
Rubber news analysis
Rubber news
Rubber climbed to a three-week high after a rally in oil raised the appeal of the commodity as an alternative to synthetic products used in tires and tight supply boosted the Thai cash price to a record.
Demand remained strong amid shortage in supply as rain persists in southern Thailand.
May-delivery rubber on the Tokyo Commodity Exchange gained as much as 2.3 percent to 378.8 yen per kilogram ($4,569 a metric ton) before settling at 378 yen.
The price climbed to the highest level since Nov. 11, when a most-active contract reached a 30 year high of 383 yen. However the night session witnessed the prices moving to the negative zone as all deliveries closed with minor losses. Though all the contracts opened above the previous closing and the prices rose as high as 379 yen, towards closing the prices came down and settled below the previous day closing.
The most active May deliveries closed at 377.4 yen making loss of 0.6 yen. Today all contracts except spot month opened with negative trend. Spot month opened 1.2 yen above the previous close and is trading at that level. All other contracts except February opened below previous day closing price. Most active May deliveries opened 1.4 yen below previous day close and moved up to 376.8, but soon dropped to 372.8 yen and is currently trading at 374.8 making loss of 3.2 yen. In Shanghai natural rubber futures were traded with gains.
Most active May deliveries opened 780 yuan above pervious day closing price and rose as high as 33080 yuan. But later the prices climbed down and settled at 32835 yuan making gain of 815 yuan. However, March deliveries made the highest gain of 945 yuan for the day. All contracts except April today opened below previous day close.
Most active May deliveries opened 35 yuan below the previous closing and moved as high as 32920, but soon dropped to 32255 and is currently trading at that level. The natural rubber stock with Shanghai Futures Exchange yesterday remained at the previous level of 41155 tons. China’s natural rubber inventories dropped for the first time in 10 weeks as stocks declined by 6665 tons to 55346 tons based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin on Dec. 3.
Physical rubber prices in Thailand, the biggest producer and exporter, increased to a record on Dec. 3 on a supply shortage, according to the Rubber Research Institute of Thailand. Futures also gained on expectation the Federal Reserve may take more steps to boost economic growth. The RSS 3 natural rubber prices continued to remain at the previous day closing level. RSS 3 futures prices moved to positive zone after opening. June deliveries made the highest gain of 3.10 baht per kg whereas most active July deliveries rose as high as 138.40 and is currently trading at 138.35 making gain of 2.85 baht per kg.
In Malaysian market SMR 20 natural rubber physical FOB prices rose from the previous day level and closed at 1348.50 sen per kg for buyers and 1362 sen per kg for sellers.
Auto Sector News
The revised free trade agreement between South Korea and U.S. is mutually beneficial and won’t hurt the nation’s carmakers, says South Korean Trade Minister Kim Jong Hoon. The countries agreed on Dec. 3 to revise the stalled free- trade accord and change provisions for automobiles and pork.
The U.S. will now end its 2.5 percent tariff on automobiles in five years, instead of immediately or after three years, as was previously agreed. South Korea will cut its 8 percent tariff on U.S. automobile imports to 4 percent immediately, instead of eliminating it entirely. Mazda Motor Corp.’s is considering to introduce plug-in hybrid and electric cars after it releases a gasoline-electric hybrid model.
Mazda would follow Nissan Motor Co., whose battery powered Leaf goes on sale this month, as well as Toyota Motor Corp. and Honda Motor Co. electric cars and plug-ins planned for 2012. It will start selling the hybrid model by 2013 using Toyota’s technology. Russian carmaker OAO Soller’s Chief Executive Officer Vadim Shvetsov said its venture with Fiat SpA will produce 500,000 vehicles a year.
The venture, funded by state development bank VEB, will make 300,000 vehicles a year in the first stage of production, later increasing that to half a million. Hyundai Motor Co., South Korea’s largest carmaker, resumed production at its factory in Ulsan, Seoul, today as a sit-in protest by temporary workers continued. Production at the plant, southeast of Seoul, stopped Nov. 15 with the striking workers demanding they be made permanent employees, according to the company.
Crude oil News
Oil traded at the highest in 26 months as signs the economic recovery is gathering pace in the U.S., the world’s biggest crude-consuming nation, stoked speculation that fuel demand will increase.
Oil rose as much as 0.6 percent after Federal Reserve Chairman Ben S. Bernanke said the U.S. may take more steps to bolster the economy. A return to a recession “doesn’t seem likely,” he said. Prices also gained as cold weather boosted heating demand in Europe. Brent crude declined 0.190 points or 0.21% and was trading at 91.260.
Stock Market
Most of the Asian Markets have opened below the previous closing. Nikkei lost 65.60 points and was trading at 10101.60.TOPIX reached 876.55 after retreating 4.86 points or 0.55%.Where as HANG SENG is showing a positive trend with an increase of 47.19 points and was trading at 23284.90.US Markets were also in the mixed trend. DOW declined to 11362.20 after losing 19.90 points. While NASDAQ rose 3.46 points and closed trading at 2594.92.
India News
State Bank of India, the country’s top lender, said it will raise deposit rates by between 50 and 150 basis points for various maturities, with effect from Dec. 7. French companies are committed to invest euro 10 billion (USD 13.37 bn) in India by 2012,says Christine Lagarde the country’s Minister of Economy and Finance.
Weather Report
In Malaysia at Kuala Lumpur thunderstorms and scattered rain are expected. Temperature may go up to 31 °C during day time. 60 per cent chance of precipitation is expected during the day time and night time. Temperature is expected to be at 23 °C at the low level.
According to the Jakarta Observatory, thunder storms and scattered clouds is expected. Day temperature may go up to 28 °C. There is 60 per cent chance for precipitation and temperature at low level will be 24 °C.
In Thailand, thunderstorm and scattered rain is expected with 40-60 per cent chance of precipitation.
Temperature may go up to 30°C during day time. Temperature is expected to be at 23 °C at the low level. In Beijing, China, 10 percent chance of precipitation is expected. The climate is expected to be partly cloudy. Temperature may go up to 7°C during day time. Temperature is expected to be at -04°C at the low level. In Singapore, thunderstorms and scattered clouds are expected with 60 per cent chance of precipitation.
Temperature may go up to 31 °C during day time. Temperature is expected to be at 24 °C at the low level.
In Thiruvananthapuram, thunderstorms and scattered rain are expected with 60 percent chance of precipitation. Temperature may go up to 29 °C during day time. Temperature is expected to be at 24 °C at the low level.
In Kottayam, scattered rain with thunderstorms is expected with 60 per cent chance of precipitation. Temperature may go up to 30 °C during day time. Temperature is expected to be at 23 °C at the low level.