SINGAPORE: Japanese rubber futures rebounded on Wednesday to its highest closing in 7 weeks, as slower-than-expected economic growth in China raised expectations for the world’s largest rubber consumer to deliver more stimulus measures.

The Osaka Exchange (OSE) rubber contract for June delivery closed up 3.3 yen, or 1.24%, at 268.7 yen ($1.82) per kg, the highest close since Nov. 28, 2023.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 50 yuan to finish at 13,775 yuan ($1,914.18) per metric ton.

Top consumer China’s economy grew slightly slower than expected in the fourth quarter, with a deepening property crisis, mounting deflationary pressures and weak demand reinforcing expectations that Beijing will have to roll out more stimulus measures soon.

“The projections for the next two years are still bleak and should trigger authorities to boost stimulus influx,” Priyanka Sachdeva, senior market analyst at Phillip Nova, said.

China produced 3.04 million of cars in December, marking a 24.5% year-on-year increase, data from the National Bureau of Statistics showed on Wednesday. New energy vehicle production in December stood at 1.14 million, soaring 43.7% year-on-year.

Four factories in Spain owned by French tyre maker Michelin are planning to halt output on Jan. 20-21 due to delays in raw material delivery caused by the Red Sea crisis. But the company said it had sufficient rubber stocks to cope with the ongoing situation.

Japan’s benchmark Nikkei average closed down 0.4%. The Japanese yen weakened 0.46% to 147.88 against the dollar, pushing it to a fresh one-and-a-half month low. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.

The front-month rubber contract on Singapore Exchange’s SICOM platform for February delivery last traded at 153.40 US cents per kg, down 0.45%.