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Asia Rubber-Tokyo futures jolts physical prices up

SINGAPORE: A surge in Tokyo futures jolted physical rubber prices higher in Southeast Asia following the Lunar New Year celebration, a big headache for many buyers ahead of the wintering slowdown, traders said on Tuesday.

"Physical prices have jumped because of what happened in Tokyo during our holiday," said a trader. "Buyers are quite reluctant to follow Tokyo."

Traders said Thai RSS3 was quoted as high as 77-78 US cents per kg for April delivery, up from around $70 on Friday.

They expected prices for Indonesian also to jump from 33-US cents per lb for April shipment last traded on Friday, when suppliers faced a weakening rupiah against the dollar. Few offers were seen so far this week.

Most Tokyo rubber futures surged by their daily limit on short-covering and panic buying on Monday, fuelled by bullish sentiment on other TOCOM contracts, including precious metals. This caught many players off guard in the Southeast Asian physical rubber market after returning from a major celebration for the Lunar New Year, which began on Friday.

The price rise came in addition to the latest price recovery, triggered by a shortage in raw materials partly due to rains ahead of the wintering season later this month.

"We are quite worried about raw materials supply now. It looks like this market will be at least well supported at these levels," another trader said.

Another trader added: "It's difficult to say whether prices will go up from here. Yet, they're unlikely to come down."-Reuters