SINGAPORE: Japanese rubber futures rose on Wednesday, buoyed by higher synthetic rubber and oil prices, although gains were limited by a stronger yen.
The Osaka Exchange (OSE) rubber contract for December delivery closed up 7 yen, or 2.09%, at 322.2 yen ($2.08) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery rose 105 yuan, or 0.73%, to 14,545 yuan ($1,999.51) per metric ton.
The most active September butadiene rubber contract on the SHFE was up 195 yuan, or 1.33%, at 14,885 yuan ($2,046.24) per metric ton.
Oil prices rebounded, snapping three straight sessions of decline, as falling US crude inventories and growing supply risks from wildfires in Canada boosted prices.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Dollar/yen went down nearly 1% on Tuesday and fell another 0.6% on Wednesday in Asia to its lowest since mid-May at 155.36 per dollar, as short sellers bailed out ahead of a central bank meeting.
The yen is the best performing G10 currency against the dollar in July so far. A stronger Japanese currency makes yen-denominated assets less affordable to overseas buyers.
Rubber markets will continue to be range-bound for now, in the absence of “bright sparks to pull the market up”, said a Singapore-based trader. China’s top economic planner said on Tuesday it would support high-quality companies to borrow medium- and long-term foreign debt, to support the development of the real economy, according to an official statement published online. China is the world’s top rubber consumer.
The front-month rubber contract on Singapore Exchange’s SICOM platform for August delivery last traded at 162.3 US cents per kg, up 1.2%.
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