Singapore – Tocom RSS3 rubber futures gain 2.6% on decline in Japanese inventories, higher demand from tire makers as companies shift U.S.-bound production out of China to avoid stiff import tax, traders say. “Buying by tire makers and weaker yen are supporting rubber prices,” says Japan-based broker. Toyo Tires shifting production meant for U.S. to Japan from China. “The transfer of production is underway and will be completed as soon as possible,” says Tokyo-based company executive. Benchmark Tocom March rubber futures trading Y1.5 higher at Y198.7/kg, after briefly rising above Y200/kg.

Source: MoneyControl.com

TOKYO, Sept 30 (Reuters) – Tokyo rubber futures extended the previous day’s 2.8 yen gain on Wednesday as a recovery in the dollar above 90 yen encouraged buying.
FUNDAMENTALS
* The Tokyo Commodity Exchange rubber contract for March delivery <0#JRU:> was at 198.5 yen per kg at 0041 GMT, up 1.3 yen or 0.7 percent from the previous day’s close.
* The contract rose as high as 199.5 yen, the highest for any benchmark since Sept. 18, during the night session.
* A weaker yen inflates the value of yen-priced futures.
* There is uncertainty about demand, particularly from China, the world’s largest rubber consumer, given the rise in inventories there and a U.S. decision to curb imports of Chinese tyres.
* But falling rubber inventories in Japan are limiting the downside for nearby TOCOM contracts, traders said.
MARKET NEWS
* China’s eight-day National Day holiday starts on Thursday.
* The dollar hung onto gains against the yen on Wednesday, staying above 8-month lows hit earlier this week, as traders pared short positions on a view that the greenback’s slide was perhaps too fast. [USD/]
* Japan’s Nikkei share average <.N225> was up 0.3 percent. [.T]
* U.S. stocks fell on Tuesday as a surprise drop in a gauge of consumer confidence overshadowed signs of stabilisation in housing and solid earnings from Walgreen Co . [.N]
* Oil prices fell slightly on Tuesday as U.S. consumer confidence data weighed on markets and the government revised downward U.S. demand for July. [O/R]
DATA EVENTS
* The following data is expected on Wednesday:
- Japan manufacturing PMI for September (2315 GMT)
- Japan preliminary industrial output for August (2350 GMT)
- China PMI for September (0230 GMT)
- Japan Aug construction orders, housing starts (0500 GMT)
- IMF releases Global Financial Stability Report (0630 GMT)
- Euro zone flash consumer prices (0900 GMT)
- U.S. ADP employment report for Sept (1215 GMT)
- U.S. second-quarter GDP final (1230 GMT)
- U.S. second-quarter corporate profits revised (1230 GMT)
- U.S. Chicago PMI for Sept (1345 GMT)

Source: Reuters

TOKYO, Sept 29 (Reuters) – Tokyo rubber futures bounced back on Tuesday, paring a 3.2 yen fall the previous day as a recovery in the dollar towards 90 yen encouraged buying by short-term investors.
* The yen had hit an eight-month high of 88.23 per dollar on trading platform EBS on Monday. The Japanese currency retreated on Tuesday after Japan’s finance minister said intervention was possible in extreme cases. [USD/]
* A stronger yen deflates the value of yen-priced futures.
* “It’s the dollar/yen, not rubber’s fundamentals, that is providing investors cues for buying or selling,” said a manager at a Japanese commodity brokerage.
* The key Tokyo Commodity Exchange rubber contract for March delivery <0#JRU:> settled at 197.2 yen, up 2.8 yen or 1.4 percent from the previous day.
* Despite Tuesday’s rebound, the March contract looks vulnerable towards 190 yen, traders said, given uncertainty about demand particularly from China, the world’s largest rubber consumer, noting the rise in inventories there and the U.S. decision to curb imports of Chinese tyres.
* “There are few bullish factors in sight,” the manager said. “A lack of demand for South East Asia-made rubber is overshadowing the market.”
* But nearby contracts will likely be underpinned by falling inventories in Japan, limiting the downside for the key March contract to around 185 yen, the manager said.
* TOCOM’s benchmark, which is usually the most-distant contract, briefly fell below 190 yen to a six-week low in mid-September, but has held above it since then.
* Monday’s news that Malaysia, the world’s third-largest producer, had imposed a new levy, effective on Sept. 1, on imported rubber for re-export and compound rubber had little immediate impact on the market. [ID:nKL446225]
* The levy is aimed at protecting local rubber producers in Malaysia. But whether China, the main buyer of Malaysia’s compound rubber, will shift its choice to SMR20 or other pure tyre grades is not yet known, traders said.
* China recently disappeared from the physical rubber market as it turned to its own inventories. [ID:nSP462022] There are concerns that Chinese users may not return even after an eight-day National Day holiday starting on Thursday.
* Oil held steady around $67 per barrel on Tuesday after climbing more than 1 percent a day earlier amid strong equities markets and Iran’s missile tests, but gains were moderated by expected builds in U.S. fuel stocks. [O/R]
* Japan’s Nikkei share average <.N225> rose 0.9 percent on Tuesday, with exporters rebounding after the yen pulled back from an eight-month high against the dollar. [.T]

Source: Reuters

SINGAPORE (Dow Jones)–Tire companies which have manufacturing facilities in several countries are shifting production meant for export to the U.S. out of China to avoid a stiff 35% tariff, industry executives said Tuesday.

This could result in stronger demand for natural rubber in countries such as Japan, they said.

The U.S. has imposed a special 35% import tariff on light grade tires manufactured in China that came into effect over the weekend.

“It makes sense for those companies which have multinational manufacturing facilities to shift production of tires meant for export to the U.S. out of China,” said a Beijing-based rubber industry executive.

Japan-based Toyo Tires has decided to stop production of U.S.-bound passenger and light truck tires in China. According to a company announcement, most of these U.S.-bound tires will now be manufactured in Japan.

A Toyo Tires executive contacted in Tokyo declined to divulge the volume of production to be shifted to Japan from China.

Source: Dow Jones

Sept. 29 (Bloomberg) — Rubber gained for the first time in five days after the Japanese currency fell from an eight-month high, raising the appeal of yen-denominated contracts.

Futures in Tokyo also climbed as oil advanced, boosting the cost of making rival synthetic products used in car tires. Crude traded near $67 a barrel in New York on optimism about an economic recovery in the U.S., the world’s biggest energy consumer, after equities increased by the most in five weeks. Asian stocks rose today.

“The decline in the previous four days has prompted bargain hunting,” Hisaaki Tasaka, analyst at Tokyo-based commodity broker ACE Koeki Co., said today by phone. The yen’s weakness and a rally in oil prices also encouraged sentiment for rubber futures, he said.

March-delivery rubber gained as much as 2.2 percent to 198.6 yen a kilogram ($2,208 a metric ton) before closing at 197.2 yen on the Tokyo Commodity Exchange.

The yen dropped as low as 90.23 per dollar before trading at 90.05 as of 3:42 p.m. in Tokyo as Japan’s Finance MinisterHirohisa Fujii said the government may take action in markets after the currency’s gain to an eight-month high imperiled earnings of export-dependent companies.

The Japanese currency reached 88.24 yesterday, the strongest level since Jan. 23, amid speculation Japan’s new government will allow the currency to appreciate.

Crude oil for November delivery traded at $66.89 a barrel, up 5 cents, in electronic trading on the New York Mercantile Exchange at 3:42 p.m. Tokyo time. Yesterday, the contract rose 1.2 percent.

Rubber has gained 45 percent this year as surging car sales in China spurred investor buying. China’s passenger-car sales rose a record 90 percent last month, according to the China Association of Automobile Manufacturers.

January-delivery rubber on the Shanghai Futures Exchange rose 2.5 percent to close at 16,890 yuan ($2,474) a ton.

Source: Bloomberg