Japanese rubber extends declines as Chinese factories wind down for holiday

SHANGHAI: Japanese rubber futures fell for a third straight session on Friday as liquidity thinned ahead of a week-long holiday in top consumer China.

The Osaka Exchange (OSE) rubber contract for July delivery was down 0.7 yen, or 0.2percent, at 347.1 yen (USD2.26) kg. The contract lost 0.8percent this week.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 235 yuan, or 1.42percent, to 16,315 yuan (USD2,361.00) per metric ton. The contract gained 1.74percent this week.

The most-active March butadiene rubber contract on the SHFE fell 330 yuan, or 2.57percent, to 12,505 yuan per ton. Liquidity and trading volumes in the market have thinned ahead of the Lunar New Year holiday in China, according to LSEG-compiled data.

Many Chinese manufacturers have announced plans to halt production for a break or to undergo maintenance, thus feedstock demand is expected to slow significantly next week.

However, demand from overseas manufacturers will provide a floor under prices, Huatai Futures Research Institute said in a note.

Spot prices are also expected to remain firm due to an increase in production costs in Thailand, which may also indicate a supply squeeze, China-based commodity data provider SunSirs said in a note. The yen was set for its best week in almost 15 months on Friday. It was last steady at 153.08 per dollar and set to gain 2.7percent for the week.

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

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 191 US cents per kg, down 0.8percent as of 0700 GMT.