Japanese rubber futures ended mostly lower on Thursday after the most active contract failed to sustain early gains driven by strong crude oil prices.
The most-distant December Tokyo Commodity Exchange rubber contract rose more than 1 percent to a high of 300.5 yen per kg ($2.60) before closing at 295.2 yen.
That was 0.2 yen lower than on Wednesday's close. "The energy market was quite strong this, and that gave some impact on the market. But it didn't last long, and selling pressure came back again," said a dealer in Thailand's southern city of Hat Yai.
"If the market fails to return to the 300-yen mark, then we can see more of the downside," said the dealer who pegged key support around 280 yen. US crude oil futures hit a record high of $75.40 per barrel on Wednesday and traded close to those levels on Thursday.
Rubber prices often benefit from high crude oil prices because investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product.
In the physical sector, dealers said rains still fell in parts of Thailand, but supply generally had improved in the world's largest rubber producer. Talk of improving supply in Thailand dragged down Tokyo futures earlier this week. "Nothing happens on the physical side because most Thai producers have refused to cut down the price.
I heard some buyers were looking to buy RSS3 at $2.62, but no one was willing to sell at below $2.70," said the dealer in Hat Yai. The price of Thai unsmoked sheet (USS), the raw material for export-grade rubber sheet, was steady at 95 baht ($2.48 a kg), while Thailand's benchmark RSS3 rubber sheet for August shipment was unchanged at $2.70 a kg.
Tyre-grade Standard Thai Rubber or STR20 block, for August shipment was also unchanged at $2.50 a kg. In neighbouring Indonesia, tyre-grade SIR20 was traded overnight at 106 US cents per pound ($2.34 a kg) free on board at Begawan port in North Sumatra.
"It's such a lousy market today. Buyers will only buy at 106.75 cents while most sellers are keen to sell at 107 cents," said a dealer in Padding, provincial capital of West Sumatra.
In Malaysia, SMR20 fell to $2.47 to $2.48 from $2.50 FOB. In China, the most-active September Shanghai rubber contract fell 120 yuan per tonne to end at 25,400 yuan ($3,177) per tonne.