SINGAPORE: Japanese rubber futures rose on Tuesday, supported by a softer yen and prospects of further fiscal stimulus from top consumer China, although softer economic data from Beijing and weaker oil prices capped gains.
The March Osaka Exchange (OSE) rubber contract closed up 6.7 yen, or 1.73%, at 393.1 yen ($2.63) per kg. The January rubber contract on the Shanghai Futures Exchange (SHFE) rose 85 yuan, or 0.46%, to 18,375 yuan ($2,583.04) per metric ton. The yen last fetched 149.72 per dollar, having slipped as low as 149.98 on Monday, its weakest level since Aug 1 The currency is down 4% this month.
A weaker currency makes yen-denominated assets more affordable to overseas buyers. China may raise an additional 6 trillion yuan ($850 billion) from special treasury bonds over three years to stimulate its sagging economy, local media reported.
The report comes after the finance minister said on Saturday that Beijing will “significantly increase” debt, although the absence of details on the size and timing of the fiscal measures disappointed some investors.
Data in recent months, including September trade and new lending figures released on Monday, missed expectations, raising concerns that China may struggle to fend off deflationary pressures. Oil prices slid as much as $3 to a near two-week low on Tuesday on the back of a weaker demand outlook and after a report said Israel is willing not to strike Iranian oil targets.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month November rubber contract on Singapore Exchange’s SICOM platform last traded at 200.8 US cents per kg, up 1.1%.
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