SINGAPORE: Japanese rubber futures retreated on Wednesday, as fresh tariff threats from US President Donald Trump on automobiles dampened demand prospects for the tyre-making material, outweighing supply woes in top producer Thailand.
The Osaka Exchange (OSE) rubber contract for July delivery ended daytime trade 4.8 yen lower, or 1.28%, at 369.3 yen ($2.44) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery dipped 40 yuan, or 0.22%, to 17,780 yuan ($2,441.23) per metric ton.
The most active February butadiene rubber contract on the SHFE fell 75 yuan, or 0.53%, to 14,005 yuan ($1,922.92) per ton. Trump said on Tuesday he intends to impose auto tariffs “in the neighbourhood of 25%”, the latest in a series of measures escalating trade-war tensions.
Trump’s tariffs could cost the auto industry $110 million in added costs each day and potentially $40 billion for the year without major production shifts, analysts said. Japanese shares ended lower, dragged down by automakers.
Automobile sales could influence the intensity of manufacturing, which involves using rubber-made tyres. “Wintering in Africa, Thailand, and Vietnam is tightening supply, while economic uncertainty keeps demand cautious,” a Singapore-based trader said. Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September. Farmers should look out for potential crop damage from February 22-25, Thailand’s meteorological agency said, adding that the South should beware of heavy rains and accumulations.
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