SINGAPORE: Japanese rubber futures dropped on Thursday, pressured by uncertain economic prospects for top consumer China as investors looked ahead to an important Beijing meeting for more clues on policy stimulus.
The May Osaka Exchange (OSE) rubber contract closed down 6.9 yen, or 1.82%, at 371.4 yen ($2.44) per kg.
The May rubber contract on the Shanghai Futures Exchange (SHFE) ticked up 90 yuan, or 0.48%, to finish at 18,750 yuan ($2,582.15) per metric ton.
The most active February butadiene rubber contract on the SHFE fell 65 yuan, or 0.47%, to 13,645 yuan ($1,879.11) per metric ton.
China’s leaders and policymakers are considering allowing the yuan to weaken in 2025 as they brace for a second Trump presidency, Reuters reported on Wednesday.
The contemplated move reflects China’s recognition that it needs bigger economic stimulus to combat Trump’s threat of bigger tariffs, people with knowledge of the matter said.
Earlier this week, China’s Politburo had pledged to adopt an “appropriately loose” monetary policy next year, the first easing of its policy stance in some 14 years.
Beijing is scheduled to hold its Central Economic Work Conference this week, where it will set policy priorities including its annual growth goal for the coming year.
Volatility in the natural rubber market has intensified since December, with significant influence from both macro and fundamental factors, Chinese financial data provider Tonghuashun Information said.
In the short term, disruptions to rubber tapping in southern Thailand, low domestic inventories, and optimism about China’s upcoming economic meeting will support the market as it fluctuates at a high level, added Tonghuashun.
Top producer Thailand’s meteorological agency warned of heavy rains that may cause flash floods from Dec. 12-16.
The front-month January rubber contract on the Singapore Exchange’s SICOM platform last traded at 200.8 U.S. cents per kg, down 1.3%.
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