BEIJING: Japanese rubber futures edged up for a second session on Thursday to hit a seven-week closing high, buoyed by a tightening supply outlook although Red Sea shipping disruptions and weak Chinese economic data weighed on sentiment.

The Osaka Exchange (OSE) rubber contract for June delivery closed up 0.4 yen, or 0.15% higher, at 269.9 yen per kg, its highest since Nov. 28, 2023. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery was 30 yuan higher, or 0.22%, at 13,860 yuan per metric ton.

Expectations of supply becoming tight by March 2024 are supporting the physical markets but concerns over European demand and poor Chinese economy are hurting prices, said Jom Jacob, co-founder of India-based analysis firm What Next Rubber.

“Demand prospects from Europe are partly hit by the crisis in the Red Sea. Manufacturing activities in parts of Europe are disrupted by long delays and uncertainty in the delivery of raw materials,” he said.

A crisis of confidence in top consumer China’s economy is deterring consumers from spending and businesses from hiring and investing, in what could become a self-feeding mechanism that erodes China’s long-term economic potential.

China’s patchy economic growth and a renewed slump in home sales have redoubled investors’ resolve to steer clear of the country’s markets, sending shares tumbling as foreigners quit in the absence of fresh policy support. The Japanese yen rose 0.18% against the dollar to 147.89.

Oil prices rose on Thursday as OPEC forecast relatively strong growth in global oil demand over the next two years, while the market also eyed disrupted US oil production amid a cold blast and tensions in the Middle East.

Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month rubber contract on the Singapore Exchange’s SICOM platform for February delivery last traded at 154.4 US cents per kg, up 1.5%.