SINGAPORE: Japanese rubber futures fell on Wednesday, weighed down by slowing vehicle demand in top consumer China and mounting trade war tensions, though off-season production affecting supply prospects cushioned the fall. The Osaka Exchange (OSE) July rubber contract ended daytime trade 0.6 yen lower, or 0.16%, to 368.1 yen ($2.40) per kg.
The May rubber contract on the Shanghai Futures Exchange (SHFE) rose 340 yuan, or 1.94%, to 17,825 yuan ($2,438.81) per metric ton. The most-active February butadiene rubber contract on the SHFE traded flat at 14,730 yuan ($2,015.35) per metric ton. China’s car sales fell 12% in January from a year earlier, marking the biggest drop in almost a year as automakers braced for intense competition.
Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres. Meanwhile, US President Donald Trump’s trade advisers were finalizing plans on Wednesday for the reciprocal tariffs the US president has vowed to impose on every country that charges duties on US imports, ratcheting up fears of a widening global trade war.
Still, the upstream market is bullish, as production areas in Southeast Asia are set to halt harvesting, and global natural rubber supply is transitioning to its off-season production period, Chinese rubber sales portal Natural Rubber Network said in a note. Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September. The US dollar rose 0.7% to 153.56 yen on Wednesday. A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers.
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