SINGAPORE: Japanese rubber futures closed higher on Monday supported by rising oil prices, but gains were capped by a stronger yen.

The Osaka Exchange (OSE) rubber contract for March delivery closed up 11.3 yen, or 2.88%, to 403.3 yen($2.84) per kg.

The contract closed at a 13-year high of 407.2 yen ($2.87), its highest since April 25, 2011.

The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery closed up 1,195 yuan, or 6.48%, to 19,645 yuan($2,801.15) per metric ton.

The contract closed at a 7-year high of 19,780 yuan($2,820.40),its highest since Feb. 23, 2017.

China’s factory activity shrank for a fifth straight month and the services sector slowed sharply in September, suggesting Beijing will need even more stimulus to hit its 2024 growth target, in addition to the aggressive stimulus package already unveiled.

The most active November butadiene rubber contract on the SHFE closed up 635 yuan, or 4.03%, to 16,385 yuan($2,336.31) per metric ton.

The yen edged higher to trade at 141.78 yen per dollar as Japan’s incoming prime minister Shigeru Ishiba backs higher corporate and investment-income taxes.

A stronger currency makes yen-denominated assets less affordable to overseas buyers.

Oil prices extended gains on Monday, buoyed by escalating concerns over potential supply pressures from Middle East producers following Israel’s increased attacks on Iranian-backed forces in the region.

Natural rubber often takes direction from oil prices as it competes for a market share with synthetic rubber, which is made from crude oil.