Japan rubber futures lose ground on softer Chinese demand

SINGAPORE: Japanese rubber futures fell on Tuesday, as concerns of weaker demand from top consumer China overshadowed global output disruptions.

The Osaka Exchange’s (OSE) rubber contract for May delivery fell 1.9 yen, or 0.51%, to finish at 371.0 yen ($2.41).

The May rubber contract on the Shanghai Futures Exchange (SHFE) closed down by 145 yuan, or 0.79%, at 18,320 yuan ($2,515.10) per metric ton.

Expected supply cuts and high raw material prices are supporting rubber prices, but the lack of improvement in downstream demand has put some pressure on the market, Chinese commodities data provider Longzhong Information said.

China’s Yunnan producing region has stopped harvesting and Hainan has gradually started reducing production, while southern Thailand’s output is recovering slowly as rainfall eases, Longzhong said.

China, the world’s biggest consumer of the commodity, will step up direct fiscal support to consumers and boost social security in 2025, state media said.

Data on Monday showed China’s industrial output growth quickened slightly in November, while retail sales disappointed.

The mixed data underlines the challenges facing China heading into 2025, when trade relations with the US could worsen while domestic consumption remains weak, keeping pressure on Beijing to ramp up stimulus.

Chinese leaders agreed last week to raise the budget deficit to 4% of gross domestic product next year, its highest on record, two sources said.

The yen on Tuesday was steady at 154.06 per dollar, after six straight days of selling as markets pared chances of a Japanese rate hike this week.

The front-month January rubber contract on Singapore Exchange’s SICOM platform last traded at 198.2 US cents per kg, down 0.6%.