By Emily Ou Yong
Japanese rubber futures rose on Monday, as traders covered short positions and bargain hunters stepped in after recent sharp losses, while an export ban by a major African rubber producer tightened the supply outlook.
The Osaka Exchange (OSE) rubber contract for December delivery TOCOM:TRB1!, TOCOM:TRB1! was up 8 yen, or 1.95%, at 418.3 yen ($2.59) per kg, as of 0202 GMT.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery SHFE:RU1! rose 225 yuan, or 1.35%, to 16,935 yuan ($2,496.06) per metric ton.
The most active September butadiene rubber contract on the SHFE (SHBRv1) strengthened 310 yuan, or 2.6%, to 12,250 yuan per metric ton.
Fresh buying interest and short covering following the recent sharp decline supported prices, with consumers continuing to pay premiums of 10 to 20 cents per kg over SICOM futures for imminent deliveries, signalling firm physical demand, Japan Exchange Group said in a report on Monday.
The recent steep selloff appeared driven more by speculative positioning than by a deterioration in fundamentals, said a Singapore-based rubber trader.
With the market readjusting, fundamentals remain supportive of higher prices given current breakeven levels, the trader said.
Supply concerns lent additional support.
President Boakai of Liberia, one of Africa's leading rubber producers, imposed a ban on exports of raw natural rubber, including latex and other unprocessed forms, according to Japan Exchange Group and local media reports.
The front-month rubber contract on Singapore Exchange's SICOM platform for July delivery SGX:TF1! last traded at 214.3 U.S. cents per kg, up 1.3%.
($1 = 161.7600 yen)
($1 = 6.7847 Chinese yuan)