Yen Weaker, Rubber Price Closes 1.16% higher

Prices closed higher on Thursday, boosted by expansion data from China's manufacturing sector.

The price of rubber for delivery in February 2018, the most active contract on the Tokyo Commodity Exchange (Tocom), closed up 1.16% or 2.50 points to 218.60 yen per kilogram (kg).

Previously, rubber prices opened with a 0.14% increase or 0.30 points at 216.40 yen per kg position, after trading on Wednesday (30/8) ended up 0.28% at 216.10 position.

Based on National Bureau of Statistics (NBS) data, the manufacturing purchasing managers index (PMI) rose to 51.7 in August.

The PMI figure is higher than the median forecast of economists in a Bloomberg survey of 51.3 and a PMI figure of 51.4 in July.

China's non-manufacturing PMI fell to 53.4 in August compared with 54.5 in the previous month. Even so, numbers above level 50 still show growth.

Naohiro Niimura from Market Risk Advisory said China's better-than-expected manufacturing PMI raises optimism that demand for rubber will improve.

"The weakening of the yen and the rise of the Nikkei index also gave a boost," said Niimura, as quoted by Bloomberg.

Japan's yen exchange rate was down 0.22% or 0.24 points to 110.48 yen per US dollar at 14.22 WIB.

China Data boosts the rubber price

Prices moved higher on Thursday, boosted by expansion data from China's manufacturing sector.

The price of rubber for delivery in February 2018, the most-active contract on the Tokyo Commodity Exchange (Tocom), rose 1.30 percent or 2.80 points to 218.90 yen per kilogram (kg) at 11:06 pm.

Previously, rubber prices opened with a 0.14% increase or 0.30 points at 216.40 yen per kg position, after trading on Wednesday (30/8) ended up 0.28% at 216.10 position.

Based on National Bureau of Statistics (NBS) data, the manufacturing purchasing managers index (PMI) rose to 51.7 in August.

The PMI figure is higher than the median forecast of economists in a Bloomberg survey of 51.3 and a PMI figure of 51.4 in July.

China's non-manufacturing PMI fell to 53.4 in August compared with 54.5 in the previous month. Even so, numbers above level 50 still show growth.

Naohiro Niimura from Market Risk Advisory said China's better-than-expected manufacturing PMI raises optimism that demand for rubber will improve.

"The weakening of the yen and the rise of the Nikkei index also gave a boost," said Niimura, as quoted by Bloomberg.

The Japanese yen was down 0.24% or 0.27 points to 110.51 yen per dollar as of 11.19 am while the Nikkei 225 index rose 0.86% or 167.09 points to 19,673.63

Rubber Price Does Not Reflect By Economic Condition

The meeting between the International Tripartite Rubber Council (ITRC) Committee Members and the International Rubber Consortium (IRCo) Board concludes with the conclusion that the price of natural rubber or better known as Natural Rubber (NR) is incompatible with the economic circumstances that affect it .

Although the three governments of the country - Thailand, Indonesia & Malaysia - expressed their concern about the declining rubber prices and unfavorable market factors, they have confidence that the NR market will improve and the price of rubber should reflect the true economic situation.

During the meeting, the participants discussed the welfare of small rubber plantation owners and rubber industries in their respective countries, as well as factors affecting rubber prices as well as possible measures to increase NR prices.

Both ITRC and IRCo are very interested in technical analysis of price movements on the Tokyo Commodity Exchange (TOCOM), the Shanghai Futures Exchange (SHFE), and the Singapore Commodity Exchange (SGX) Indicating that the market is currently in a consolidation phase, a new momentum in setting new directions to the market.

A similar view that the market is in the consolidation phase is also supported by an analysis of open movement - the total number of open (not yet closed or delivered) existing open-ended futures contracts submitted in one day - indicating that TOCOM, SHFE and SGX are in an oversold position, Resulting in short covering in the near future.

This analysis is in line with the situation encountered in the southern hemisphere's production regions, especially Indonesia, which is expected to decline in production as peak season declines.

Decline in production in Thailand and Malaysia is also expected to see low rubber prices and climate change, coupled with high rainfall in northern Thailand that greatly affects rubber production there.

The NR consumption for 2017 is forecasted to continue rising, supported by better world GDP growth, with positive GDP growth in giant economic countries and improved commodity indices increasing NR market sentiment.

Meanwhile, the July estimated revision of the International Monetary Fund (IMF) for GDP growth to 3.5% for 2017 is higher than the previous estimate of 3.4% in January as well as the 2016 GDP performance, 3.2%.

GDP of major NR user countries such as the US, Japan, EU and India is expected to improve, while China's GDP is forecast to remain at 6.7%.

The PRC's own economic growth for K1 2017 and K2 2017 is 6.9%, which has already far exceeded GDP estimates, and was the highest performance in 18 months. This shows great demand.

Car sales in the first six months of this year on the main market of NR - PRC, EU, Japanese & Japanese users - also posted positive growth of 3.8%, 4.7%, and 9.2% for each country.

"We firmly believe that all of the above economic background and consumption patterns have affected the change in the NR stock consumption ratio from 3.02 in early 2016 to 2.38 in July 2017 and is expected to continue to decline to 2.34 at the end In 2017, "said Chairman of the Board of Directors of IRCo, Bpk. Mesah Tarigan.

In contrast, the Association of Natural Rubber Producing Countries (ANRPC) estimates that there will be a deficit in the number of global NR supply and demand in 2017 even though the analysis does not take into account the possible decline in NR production in Thailand and Malaysia due to the Decline and climate change.

ITRC and IRCo will continue to monitor and see market changes and take into account the various steps that can be taken to increase the NR price to help small rubber plantation owners in ITRC countries so that they can earn an adequate income.

In addition, the three countries are also committed to focusing on the long-term balance between supply and demand and in this regard, they welcome the Thai Government's plan to cover a 240,000-acre rubber estate that will reduce the amount of rubber production by 360,000 per year.

Thailand, Indonesia and Malaysia will continue to study long-term measures to increase their domestic NR consumption and work together within the ITRC framework for long-term NR price stability.
  
About International Tripartite Rubber Council (ITRC) & International Rubber Consortium Limited (IRCo) ITRC countries are producing 65% of all global natural rubber (NR) production and exporting 72% NR

TOCOM recovers from 1-week low on weak yen

Benchmark TOCOM rubber futures edged up from a one-week low on Wednesday as the dollar recovered from a 4-1/2 month low against the yen.

FUNDAMENTALS

* The Tokyo Commodity Exchange rubber contract for February delivery rose 0.9 yen to 216.4 yen ($1.97) per kg by 0036 GMT, after hitting 214.6 yen in the night session, the lowest since Aug. 23.

* A weaker yen which makes yen-denominated commodities cheaper for holders of other currencies.

MARKET NEWS

* U.S. gasoline futures jumped 4 percent while crude prices were mixed on Tuesday after a hurricane shut down more than 19 percent of the country's refining capacity, curbing fuel production and further bloating crude inventories.

* The U.S. dollar strengthened to 109.83 yen from around 108.81 yen on Tuesday afternoon as traders brushed aside concerns surrounding a North Korean missile launch over Japan.

* Japan's benchmark Nikkei stock average was up 0.7 percent.

* Copper rallied to its highest in three years on Tuesday as inventories in London and Shanghai fell and the dollar sank after North Korea raised geopolitical tensions by launching a missile that flew over northern Japan

TOCOM falls on higher yen amid fresh tensions over N.Korea

 Benchmark Tokyo rubber futures ended down 1.6 percent on Tuesday, with the dollar hitting a four-month low against the yen after North Korea fired a missile over northern Japan, stoking worries of fresh tension between Washington and Pyongyang.

North Korea fired a ballistic missile over Japan's northern Hokkaido island into the sea early on Tuesday, prompting warnings for residents to take cover while provoking a sharp reaction from Prime Minister Shinzo Abe and other leaders.

Tokyo Commodity Exchange (TOCOM) futures have been weighed down by extended declines in Shanghai futures due to the recent gains in China's yuan against the dollar, brokers said.

The Tokyo Commodity Exchange rubber contract for February delivery finished 3.5 yen lower at 215.5 yen ($1.98) per kg.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 155 yuan to finish at 16,445 yuan ($2,490) per tonne.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 153 U.S. cents per kg, down 1.8 cents.

Sumitomo Rubber Industries Ltd said on Tuesday it would merge with Dunlop Sports Co Ltd, effective Jan. 1, 2018, and Dunlop Sports will be dissolved after the merger, and will be delisted from Tokyo Stock Exchange first section on Dec

TOCOM sheds early gains on stronger yen, weak Shanghai

Benchmark Tokyo rubber futures ended down on Monday after hitting a three-month high earlier in the session, as they came under pressure from a stronger yen and weak Shanghai futures, brokers said.

The U.S. dollar was quoted around 109.13 yen, compared with around 109.64 yen on Friday afternoon. A stronger yen makes Japanese currency-denominated assets more expensive when purchased in other currencies.

Shanghai futures have also been hurt by yuan's rise against the dollar to the strongest in over a year.

The Tokyo Commodity Exchange rubber contract for new February delivery ended at 219.0 yen ($2.01) per kg, down from the initial price of 219.5 yen. Earlier in the session, the contract hit 220.8 yen, its highest since May 26.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 35 yuan to finish at 16,645 yuan ($2,507) per tonne.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 154.50 U.S. cents per kg, down 0.9 cent.

Crude rubber inventories at Japanese ports stood at 6,919 tonnes as of Aug. 10, down 9.2 percent from the last inventory date, data from the Rubber Trade Association of Japan showed on Monday.

Tokyo futures fall after hitting 3-month high

Benchmark TOCOM rubber futures for new February delivery hit a three-month high on Monday, but were trading off their opening price, hit by the strength of the yen currency against the U.S. dollar.

FUNDAMENTALS

* The Tokyo Commodity Exchange rubber contract for February delivery debuted at 219.5 yen to reach as much as 219.9 yen, its highest since May 26. By 0011 GMT, it was trading down 0.2 percent from the opening price of 219.1 yen per kg.

* A stronger yen makes Japanese currency-denominated assets more expensive when purchased in other currencies.

MARKET NEWS

* U.S. oil prices were down 16 cents at $47.71 a barrel. U.S. gasoline prices soared more than 6 percent to their highest in more than two years as Tropical Storm Harvey caused widespread flooding in Houston and shut down refineries.

* The U.S. dollar was quoted around 109.30 yen, compared with around 109.64 yen on Friday afternoon.

* Japan's benchmark Nikkei stock average was up 0.2 percent.

* Copper futures retreated from their highest levels in 33 months on Friday, as investors locked in profits from a rally and adjusted positions before a long weekend.

Current Natural Rubber Price Trend Not Reflective Of Fundamentals

A Joint Meeting between Senior Officers of the International Tripartite Rubber Council (ITRC) and Board of Directors of the International Rubber Consortium (IRCo) has concluded that the current price of Natural Rubber (NR) is not reflective of the economic fundamentals that affect it.

While the three Member Governments -- Thailand, Indonesia & Malaysia -- expressed concerns that the current downward rubber price trend and market factors are unrealistic, they are also confident on the health of NR market and that prices should adjust to reflect the fundamentals.

The recent meeting discussed the wellbeing of rubber smallholders and rubber industry in their countries, factors contributing to the rubber price and possible measures to improve NR prices.

Both ITRC and IRCo are encouraged by the findings of various technical analysis of the price movements on the Tokyo Commodity Exchange (TOCOM), Shanghai Futures Exchange (SHFE) and Singapore Commodity Exchange (SGX) that indicates that the market is entering a consolidation phase, signifying the establishment of a new momentum to set a new direction for the market.

Also supporting the indication of a consolidation phase is the analysis of the open interest -- the total number of open or outstanding (not closed or delivered) futures contracts that exist on a given day, delivered on a particular day -- movement which confirms that TOCOM, SHFE and SGX are in oversold positions, leading to short covering in the near term.

The analysis is further supported by prevailing fundamentals as producing areas in the Southern hemisphere, particularly in Indonesia, are expected to experience slower production as the wintering season peaks.

A reduction in production from Thailand and Malaysia is also anticipated due to low rubber prices and change in weather pattern, compounded by unusual heavy rains in northern Thailand which affected rubber production there.

 It is also expected that NR consumption for 2017 will increase further, supported by better world GDP growth, where the positive GDP growth of major economies and improving commodity indices will further enhance the sentiment in NR markets.

Meanwhile, the revised estimates in the July forecast of the International Monetary Fund (IMF) of the world GDP growth to 3.5% for 2017 is higher than its earlier January forecast of 3.4% and higher than the 2016 GDP performance of 3.2%.

The GDP of all major NR consuming countries including USA, Japan, EU and India are all forecast to improve, while China's GDP is forecast to remain at 6.7%.

China's actual economic growth in 1Q17 and 2Q17 at 6.9%, which has already exceeded its forecast growth, is its strongest performance in 18 months and indication of a strong demand side.

Automobile sales in the first 6 months of this year in major NR consuming countries -- China, EU & Japan -- also recorded a positive growth of 3.8%, 4.7% and 9.2% respectively.

 "We strongly believe that all these fundamentals and consumption patterns have resulted to an improvement of the NR stock-consumption ratio from 3.02 at the beginning of 2016 to 2.38 in July 2017 and is expected to further decrease to 2.34 by the end of 2017," said IRCo Board of Directors Chairman Mr Mesah Tarigan. 

Meanwhile, the Association of Natural Rubber Producing Countries (ANRPC) has forecast a deficit in global supply-demand of NR in 2017 even though its projection has not taken into consideration the potential deduction of NR production in Thailand and Malaysia due to low prices and changes in weather pattern.

ITRC and IRCo will continue to monitor and analyse the market trend as well as explore other possible measures towards strengthening NR prices to ensure that the smallholders in the ITRC Countries will benefit from remunerative income.

In addition, focus will also be given by the three member countries to balance long term supply and demand and in this regard, are were encouraged by plans of the Thai Government to permanently remove 240,000 ha of rubber area which will permanently remove the supply of 360,000 MT of NR per year.

Thailand, Indonesia and Malaysia will continue to explore long term measures to enhance domestic consumption of NR and are committed towards cooperation under the framework of ITRC to ensure long term price stability of NR.

TOCOM closes at 3-month high, posts 4th straight weekly gain

Benchmark Tokyo rubber futures rose on Friday, closing at their highest level in three months, helped by a firmer Shanghai futures and fresh buys from some funds.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 2.6 yen, or 1.2 percent, higher at 219.2 yen ($2.00) per kg, the highest close since May 25. For the week, it rose 1.4 percent in its fourth straight weekly gain.

The August contract expired at 213.0 yen per kg on Friday.

The most-active rubber contract on the Shanghai futures exchange for January delivery rose 245 yuan to finish at 16,720 yuan ($2,509) per tonne.

"The Tokyo rally was backed by buying in late trade from funds which saw an upside potential going forward," said a Tokyo-based dealer.

"If the TOCOM breaks above the recent intra-day high of 220.3 yen, the market will move higher next week. But if it fails to do so, it may remain in a tight range below 220 yen, just like this week," the dealer said.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 155.0 U.S. cents per kg, up 1.5 cents.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.8 percent from last Friday, the exchange said

ANRPC notes natural rubber supply deficit in July

July witnessed a natural rubber supply deficit of 648,000 metric tons, according to the latest figures published by the Association of Natural Rubber Producing Countries.

In a recent statement ANRPC secretary general Nguyen Ngoc Bich said for the first seven months of 2017, the global NR production amounted to 6.838 million tons, including non-ANRPC member countries; while the global world consumption recorded at 7.486 million tons.

The favorable supply-demand fundamental from the deficit, however, was unlikely to overrule the physical prices over negative sentiments in the NR market such as higher rubber inventories and stronger yen, noted the ANRPC official.

During July, NR physical prices gradually improved followed by the recovery in crude oil price, especially during the first three weeks.

This, Bich noted, also narrowed the price difference between the two major TSR grades, STR-20 and SMR-20.

Throughout the last week of July, the rebound of NR prices was hit by the negative sentiment of higher rubber inventories in regional futures markets.

As a result, NR prices fell sharply across key physical markets in Thailand and Malaysia.

‘GST may hit natural rubber prices hard’

‘No clarity on rates for some products’

With lack of demand from micro and small industries due to ambiguity on Goods and Services Tax (GST), prices of natural rubber are likely to decline in the coming months.

The price has dipped from Rs. 143 per kg in April this year to Rs. 129-130 per kg (as on Wednesday). This price drop may accentuate in the months of October and November, which is the peak production season.

Further, imports still continue despite the low prices of domestic material, weakening the domestic demand and prices.

“We are entering into a growing season when abundant local material will be available to the consuming industry. Thus, suitable policies need to be brought in to restrict imports during these high cropping months to improve prices and prevent melt down of this strategic industry,” said B. K. Ajith, secretary, Association of Planters of Kerala.

There are some input materials which have gone into the bracket of higher taxation, adversely affecting the grower and increasing the cost of production. Some examples are plastic shells for tapping, fungicides, sheet rollers and other processing equipment and this needs to be reviewed and corrected.

“There is some confusion on the tax rates for certain products made out of rubber like rubber bands etc., which needs to be clearly defined and settled,” said Mr. Ajith.

The non-tyre industry, which comprises micro and very small business, has been adversely affected due to factors such as size,turnover and capacity to weather the implication of the new regulations. Most in the industry have very low turnover and are not registered under GST, which provides for exemption as unregistered producer.

Unregistered producer

However, being an unregistered producer has disadvantages in terms of claiming refund on taxes paid as well as dealing with buyers who will have to discharge the tax liability incurred for the grower.

“This has led to lack of demand from thousands of these small industries which are struggling to cope up with the new ways (GST) of doing business,” said Santhoshkumar, senior vice-president, Harrisons Malayalam Ltd., of RPG group.

Though GST recognises unregistered buyers, rubber buying and trading mandates licence as per the Rubber Act.

TOCOM climbs on position adjustments ahead of Aug expiry

Benchmark Tokyo rubber futures climbed in light trade on Thursday as investors made position adjustments ahead of the near-term contract's expiration.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.8 yen higher at 216.6 yen (US$1.98) per kg.

The TOCOM's August contract is due to expire on Friday.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 65 yuan to finish at 16,420 yuan (US$2,465) per tonne.

"The TOCOM stayed in a narrow range as there were no fresh news," a Tokyo-based dealer said.

Oil was steady on Thursday, holding gains from the previous session after another fall in US crude inventories indicated a tighter market, and as a tropical storm was heading for oil-producing facilities in the Gulf of Mexico.

But Chinese nickel futures surged on Thursday to a near six-month high on the back of strong gains in overnight London Metal Exchange prices amid supply concerns and declining inventories.

Japan's Nikkei share average fell to a 3½-month low on Thursday, dragged down by Wall Street losses, a stronger yen and steel makers after reports that the country's biggest producer was cutting prices.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 153.1 US cents per kg, down 0.5 cent.

Tokyo futures steady ahead of near-term contract's expiration

Benchmark TOCOM rubber futures were steady on Thursday, with investors making position adjustments ahead of the near-term contract's expiration on Friday.

FUNDAMENTALS

* The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery was unchanged at 215.8 yen ($1.98) per kg as of 0033 GMT, after falling 0.7 yen the previous day. The TOCOM's August contract is due to expire on Friday.

* The most-active rubber contract on the Shanghai futures exchange for January delivery eased 25 yuan to 16,460 yuan ($2,473) per tonne in a night trade.

* China's imports of natural rubber rose 0.82 percent in July from a year earlier, according to official customs data.

MARKET NEWS

* The U.S. dollar was quoted around 109.01 yen in early Thursday trade in Asia after falling 0.5 percent to 108.97 yen the previous day.

* Japan's benchmark Nikkei stock average was down 0.2 percent on Thursday after Wall Street slid the previous day.

* Oil prices rose on Wednesday after U.S. crude inventories declined for the eighth straight week and as a storm approached the Gulf Coast with the potential to disrupt oil and refined products output.

* Nickel prices surged to an eight-month high on Wednesday on expectations of strong demand from top consumer China, supply concerns and declining stockpiles

TOCOM edges lower in thin trade on softer Shanghai

Benchmark Tokyo rubber futures edged lower in thin trade on Wednesday, dragged down by softer Shanghai futures.

"Rubber prices dropped despite a weaker yen against the U.S. dollar as sliding Shanghai led the way down," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.7 yen lower at 215.8 yen per kg.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 110 yuan to finish at 16,475 yuan per tonne.

"Along with other commodities such as copper, iron ore and coal, rubber seemed to be in a correction after a rally since June," Yoshida said.

London metals slipped on Wednesday as the dollar stood tall ahead of a meeting of global central bankers at Jackson Hole in the United States later in the week.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 154.1 U.S. cents per kg, down 2.2 cents.

TOCOM said on Tuesday that it halted its evening trading session after a system glitch occurred at around 5 p.m. local time (0800 GMT). It resumed trading from 8 p.m. (1100 GMT), except for rubber futures which normally trade between 4:30 p.m. to 7 p.m

TOCOM inches lower after overnight fall in oil prices

Benchmark Tokyo rubber futures inched lower on Tuesday, pressured by weaker oil prices overnight, but losses were partially offset by healthy sentiment in the industrial metals market.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.3 yen lower at 216.5 yen (US$1.98) per kg.

The most-active rubber contract on the Shanghai futures exchange for January delivery rose 105 yuan to close at 16,700 yuan (US$2,509.5) per tonne.

"Like crude oil market, rubber prices have been stuck in a narrow range of between 178 yen and 230 yen in recent months as there has been no significant fundamental news," said Masayo Kondo, president of Commodity Intelligence, a Japanese commodity market research company.

"I expect the boxed-ranged trading to continue for a while unless the US stock market takes a deep dive, bringing the Nikkei stock index down," he said.

Oil prices fell nearly 2% on Monday, pulling back from last week's rally, but were up slightly on Tuesday amid indications that supply is gradually tightening.

London copper rose to a fresh three-year high on Tuesday after a string of results from mining companies buoyed sentiment towards the sector, which also found wider support from robust gains in steel material prices in China.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 154.6 US cents per kg, down 0.1 cent.

TOCOM rises on firm oil and Shanghai, but Nikkei weighs

Benchmark Tokyo rubber futures rose on Monday, helped by Friday's jump in oil prices and firmer Shanghai futures, but gains were capped by weakness in Tokyo's Nikkei share average, dealers said.

Oil prices surged 3 percent on Friday, but dipped on Monday, weighed down by rising U.S. output although a 13 percent fall in U.S. crude inventories since March indicated a gradually tightening market.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.6 yen higher at 216.8 yen ($1.99) per kg, after touching a high of 219.4 yen earlier in the session.

The most-active rubber contract on the Shanghai futures exchange for January delivery rose 145 yuan to finish at 16,585 yuan ($2,486) per tonne.

"Strong oil prices last Friday and Shanghai gains lent support to the TOCOM, but languished Tokyo equities weighed on the market sentiment," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Japanese stocks fell to a fresh 3-1/2-month low on Monday as global investors remained cautious amid worries over whether the Trump administration will be able to implement growth boosting measures.

"Since the TOCOM's forward-month contracts are cheaper than Shanghai prices, we may see more arbitrage deals, buying the TOCOM and selling Shanghai," Kikukawa said.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 154.3 U.S. cents per kg, down 0.9 cent

Tokyo futures rise on stronger oil prices

Benchmark TOCOM rubber futures rose on Monday, backed by a jump in oil prices on Friday and a solid tone in Shanghai futures.

FUNDAMENTALS

* The Tokyo Commodity Exchange rubber contract for January delivery was up 1.4 yen, or 0.7 percent, at 217.6 yen ($1.99) per kg as of 0033 GMT, after posting a third straight weekly gain.

* The most-active rubber contract on the Shanghai futures exchange for January delivery rose 80 yuan to 16,520 yuan ($2,477) per tonne in an overnight trade.

* Crude rubber inventories at Japanese ports stood at 7,616 tonnes as of July. 31, up 0.3 percent from the last inventory date, data from the Rubber Trade Association of Japan showed on Friday.

* Rubber inventories at TOCOM warehouses as of August 10 stood at 3,584 tonnes, down from 3,871 tonnes on July 31 but down 38 percent from a year earlier, according to the exchange's latest report.

* Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.0 percent from the prior Friday, the exchange said on Friday.

* Confidence at Japanese manufacturers rose to its highest level in a decade in August led by materials producers, a Reuters poll showed, a further sign of broadening recovery in the economy.

MARKET NEWS

* Oil prices rose sharply on Friday, as the dollar fell and U.S. drillers cut rigs, feeding a rally that boosted global benchmark Brent crude to a weekly gain while U.S. crude was virtually flat on the week.

* The U.S. dollar dropped nearly 1 percent against the yen last Friday, falling to 108.58 yen, its lowest since late April. It was quoted around 109.22 yen in early Monday.

* Japan's benchmark Nikkei stock average inched lower on Monday after Wall Street indexes ended a volatile session lower last Friday.

TOCOM drops on profit-taking, but posts 3rd weekly gain

Benchmark Tokyo rubber futures dropped on Friday as investors took profits following a fall in Shanghai futures and ahead of the weekend, but it marked a third straight weekly gain, backed by firmer demand in China, the world's biggest rubber buyer.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 1.0 yen lower at 216.2 yen (US$1.98) per kg, sliding from a near 3-month high of 220.3 yen touched the previous day.

For the week, it managed to post a 1% gain.

"Shanghai futures have been tracking base metals markets lately and Shanghai's overnight loss following weaker metals prices prompted investors in Tokyo to take profits in early trade," said Toshitaka Tazawa, analyst at Fujitomi Co.

The most-active rubber contract on the Shanghai futures exchange for January delivery fell 20 yuan to finish at 16,580 yuan (US$2,485) per tonne, after touching a low of 16,110 yuan earlier in the session.

Shanghai metals futures opened lower across the board on Friday, weighed down by currency uncertainty and negative sentiment in metals markets overnight, although zinc prices rallied close to decade-highs for the second time this week, leading mixed trading in base metals in later trade.

"Shanghai rubber has tried but failed to reach a key 17,000 yuan mark. If it breaks above that level next week, it will help boost the TOCOM above 220 yen, but an opposite scenario will mean a downside risk to the TOCOM," Tazawa said.

The front-month rubber contract on Singapore's SICOM exchange for September delivery last traded at 155.1 US cents per kg, up 1.2 cent.

Global and China Natural Rubber Industry Report, 2017-2021

In 2016, the global natural rubber output edged up 1.1% year on year to 12.4 million tons, and the consumption rose by 3.8% year on year to 12.6 million tons, indicating the gap of 200,000 tons between supply and demand. In the context of steady growth in rubber demand and underproduction, it is expected that the global natural rubber market will continue to be in short supply in 2017-2021, with the supply and demand gap of about 700,000 tons by 2021.

At present, the regional structure of the global natural rubber supply and demand is uneven. Thailand, Indonesia, Malaysia, India, Vietnam and China are the world's top six natural rubber producers, contributing 86.5% to the global total output in 2016; wherein, Thailand ranked first with the output of 4.5 million tons and the share of 36.3% in 2016. In the world, natural rubber is mainly consumed in Asia, Africa, Latin America and other emerging industrialized areas, which enjoyed the share of about 75% in 2016.

China is the world's largest producer of natural rubber, and its consumption in 2016 jumped by 4.6% year on year to 4.896 million tons, of which 77.9% was used for radial tires. Driven by the steady development of the tire industry, China's natural rubber consumption is expected to keep an AAGR of 4.5% during 2017-2021 and hit 5.788 million tons by 2021, of which about 90% will be used in radial tires.

Restricted by natural rubber resources, China produced about 764,000 tons of natural rubber in 2016, accounting for only 6.2% of the global output. By 2021, China may produce 1.079 million tons. Amid the serious imbalance between supply and demand, China saw the gap of about 4.132 million tons in 2016; the gap will reach 4.709 million tons by 2021.

In terms of the price, the natural rubber price bucked the downward trend to rise rapidly from H2 2016 to mid-February 2017 and peaked at RMB20,700 / ton since 2014, thanks to higher market prices of international commodities (crude oil, etc.) and quick demand growth of downstream industries (such as heavy truck tires). Later, the main producer Thailand released its storage for four consecutive times, resulting in accelerated supply; however, the consumption growth remained unchanged, so that the natural rubber price dropped down from late February to the end of June, but rebounded slightly in July. In the next year, the broad market and short supply may boost the natural rubber price to show a slight uptrend.

The world's leading natural rubber manufacturers are mainly distributed in Southeast Asia (Thailand and Singapore, etc.), including Sri Trang Agro-Industry, Von Bundit, Thai Hua Rubber Public, TRUBB, Southland Rubber and Sinochem International; among them, Sri Trang Agro-Industry is the world's largest natural rubber producer, and its sales volume accounted for 11.9% of the global total consumption in 2016.

Chinese natural rubber manufacturers are mainly large-sized agricultural reclamation and rubber groups, represented by Sinochem International, China Hainan Rubber, Guangken Rubber, Yunnan State Farms Group and so on. In recent years, major producers have actively deployed overseas markets and seized more market shares. Sinochem International acquired the Singapore-listed company Halcyon Agri Corporation Limited in 2016 to fulfill a global layout of major natural rubber producing areas in West Africa, Southeast Asia and China; in April 2017, the company established Halcyon Natural Rubber (Shanghai) Co., Ltd. to integrate natural rubber marketing and trade of Sinochem International in China. Guangken Rubber took over Thai Hua Rubber Public Co., Ltd. which is Thailand's third largest natural rubber producer in August 2016. As soon as the acquisition is completed, the company will obtain the natural rubber capacity of 1.5 million tons/a, and surpass Sinochem International to rank first in China by capacity.