SINGAPORE, Dec 8 (Reuters): Tokyo rubber futures hit a 17-year high today and lifted the price of tyre grades in Asia as crude oil rebounded and inventories in Japanese warehouses fell.
The benchmark May 2006 contract 0 JRU: in TOCOM rose to as high as 215.4 yen ($1.78) per kg, its highest since June 1988, when the most active contract hit a high of $228.2 yen per kg.
Oil helped the market resist pressure from a firm yen that normally induces profit-taking. US crude CLc1 rose 19 cents to $59.40 a barrel, having lost 73 cents to settle at $59.21 Wednesday on news of surprisingly robust US crude and fuel inventories.
Dealers said China, the world's largest consumer, showed buying interest this week ahead of the year-end, but details were sketchy. Singapore dealers, who normally sell rubber to China, have been buying rubber from Indonesia in the last three days.
Indonesia's tyre-grade SIR20 for February shipments was traded late Wednesday at 74.25 US cents per pound ($1.63 a kg) free on board Palembang and Belawan ports in Sumatra.
Dealers said declines in rubber stocks in Japan supported Tokyo futures while a firm oil price may encourage more tyre makers to shift to natural rubber from synthetic rubber, which is a petroleum product.
Crude rubber stocks held at private Japanese warehouses fell to 8,640 tonnes as of November 30, down about 6.0 per cent from November 20 when the previous data was taken, the Rubber Trade Association of Japan said Wednesday.
Domestic crude rubber stocks have been in a slump since May as domestic end-users have turned to these inventories after delays in supplies from Thailand, the world's largest rubber producer and exporter.
Thailand has been hit this year by drought and violence in key rubber producing areas.