OREANDA-NEWS. February 03, 2015. Benchmark Tokyo rubber futures rose on Monday, rebounding from a 2-week low hit during Friday's evening session, as a decline in Japanese rubber inventories prompted fresh buying and some investors looked for bargains, dealers said.

Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, have been under pressure on oversupply concerns and ended January trade with an 8 percent drop.

The Tokyo Commodity Exchange rubber contract for July delivery gained 6.2 yen, or 3.2 percent, to finish at 202.3 yen (\\$2) per kg. It dropped to as low as 194.8 yen, the lowest since Jan. 21, during the evening session on Friday, which is considered part of Monday's trade by TOCOM.

The market inched higher in early trade on the back of a surge in oil prices last Friday, but gains were limited as weak Chinese factory data added to worries over slowing growth and slack demand in the world's biggest buyer.

China's factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January and firms see more gloom ahead, an official survey showed, raising expectations that policymakers will take further action to forestall a sharper slowdown.

"But the market got a boost after data showed a drop in inventories," said Satoru Yoshida, commodity analyst at Rakuten Securities.

Crude rubber inventories at Japanese ports fell 0.5 percent from 10 days ago to 12,976 tonnes as of Jan. 20, data from the Rubber Trade Association of Japan showed on Monday.

"Since the benchmark dropped to well below 200 yen last Friday, there was also some bargain-hunting," Yoshida said.

The most-active rubber contract on the Shanghai futures exchange for May delivery rose 220 yuan to finish at 13,255 yuan (\\$2,118) per tonne.