SINGAPORE: Japanese rubber futures edged higher on Tuesday as global supply uncertainty overshadowed a weaker seasonal demand outlook, while prospects of further monetary stimulus in top consumer China lifted market sentiment.
The Osaka Exchange (OSE) rubber contract for May delivery closed up 2.5 yen, or 0.69%, at 366.5 yen ($2.33) per kg. The May rubber contract on the Shanghai Futures Exchange (SHFE) rose 145 yuan, or 0.83%, to 17,625 yuan ($2,414.78) per metric ton. Rubber tapping has stopped in China’s producing regions of Yunnan and Hainan, and is affected by rainfall in Indonesia and Malaysia, Chinese financial information site Hexun Futures said in a note.
In top producer Thailand, the monsoon prevailing over the gulf and southern region will strengthen, while the high-pressure system covering the upper parts of the country will weaken, the country’s meteorological agency said on its website.
Demand in the traditional off-peak season remains relatively weak, said Hexun. Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, two sources said, which would be the highest on record, as Beijing ramps up fiscal stimulus to revive a faltering economy. The debt issuance plan comes as China prepares to soften the blow from an expected increase in US tariffs upon Donald Trump’s return to the White House in January. The proceeds will be targeted at boosting consumption via subsidy programmes, equipment upgrades by businesses and funding investments in innovation-driven advanced sectors, among other initiatives.
The yen languished near a five-month low at 156.99 per dollar. A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers. The front-month January rubber contract on Singapore Exchange’s SICOM platform last traded at 189.3 US cents per kg, up 1.3%.
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