BEIJING: Japanese rubber futures dropped on Thursday, snapping two sessions of gains, as weak demand and tariff uncertainties weighed on the market.
The Osaka Exchange (OSE) rubber contract for November delivery was down 2.71% at 290.9 yen per kg.
“In general, demand is weak and inventories are ample in most consuming countries. Automotive sales are also facing headwinds so all of this could eventually affect rubber, a key raw material for the tyre market,” said Farah Miller, founder of rubber-focused data firm Helixtap in Singapore.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery dropped 1.81% to 13,585 yuan per metric ton.
The most active July butadiene rubber contract on the SHFE eased 1.12% to 11,035 yuan per metric ton.
The price of Thailand’s benchmark export-grade smoked rubber sheet (RSS3) and block rubber was down 0.22% and 0.63% at 76.88 baht and 61.8 baht, respectively.
Japan’s Nikkei average futures fell 0.7% to close at 38,173.09.
Japanese rubber futures extend gains
A government survey showed Japan’s business sentiment worsened in April-June for the first time in five quarters, amid concerns over U.S. tariff policy hitting the export-heavy economy.
Automakers and auto parts makers expect profits to plunge 19.8% in fiscal 2025, the survey showed.
Oil prices eased on Thursday, reversing gains made earlier in the Asian trading session, as market participants assessed a U.S. decision to move personnel from the Middle East ahead of talks with Iran over the latter’s nuclear-related activity.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September.
The front-month rubber contract on Singapore Exchange’s SICOM platform for July delivery last traded at 160.4 U.S. cents per kg, down 1.9%.
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