SINGAPORE: Japanese rubber futures fell on Tuesday, weighed down by a weak demand outlook from top consumer China, while a stronger yen also added to the decline.
The Osaka Exchange (OSE) rubber contract for December delivery ended the session lower at 315.6 yen ($2.02) per kg.
The contract fell 7.9 yen, or 2.44%, its sharpest drop since June 17.
The September rubber contract on the Shanghai Futures Exchange (SHFE) finished at 14,370 yuan ($1,975.42) per metric ton. It closed down 230 yuan, or 1.58%, its largest loss since July 5.
Amid weak Chinese demand for rubber, market participants are waiting for more signals to push the market either way before returning, said Farah Miller, CEO of independent rubber-focused data firm Helixtap Technologies.
Tyre manufacturers are “waiting on the sidelines for opportunistic trades”, added Miller.
China surprised markets by cutting its major short and long-term interest rates on Monday, its first such broad move since last August, signalling intent to boost economic growth just days after its third plenum.
China’s shaky economic recovery continues to be plagued by weak domestic demand, persistent deflationary pressures and an anaemic property sector, with analysts saying the government’s stimulus measures have been insufficient.
Against the yen, the dollar fell 0.45% to 156.32. The yen has found some support on the back of Tokyo’s recent bouts of intervention to prop up the currency and as traders looked to the Bank of Japan’s July policy meeting, where it is expected to lay out a detailed bond taper plan.
A stronger currency makes yen-denominated assets less affordable to overseas buyers.
The front-month August rubber contract on Singapore Exchange’s SICOM platform last traded at 160.4 US cents per kg, down 1.1%.
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