SHANGHAI: Japanese rubber futures rose on Tuesday, as a recent surge in butadiene rubber prices led manufacturers to substitute synthetic rubber for natural rubber.
The Osaka Exchange (OSE) rubber contract for August delivery was up 3.8 yen, or 1.06 percent, at 360.7 yen (USD2.27) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 60 yuan, or 0.37percent, to 16,225 yuan (USD2,355.14) per metric ton. The most active May butadiene rubber contract on the SHFE eased 10 yuan, or 0.06percent, to 16,800 yuan (USD2,438.60) per metric ton. Butadiene rubber prices surged to an all-time high on Monday, and rallied again on Tuesday before cooling off slightly. The surge in synthetic rubber futures is the result of a confluence of geopolitical risks, strong cost support and supply contraction, a report from Tianfeng Futures said.
Persistently high crude oil prices have injected strong expectations of rising costs into the entire energy and chemical industry chain, and synthetic rubber is expected to maintain a high-level, wide-range fluctuation pattern in the short term, the report added. Strong tire exports have substantiated demand, but the rise in butadiene rubber costs has become increasingly unsustainable for tire manufacturers, the report noted. High butadiene rubber prices also lent support to natural rubber prices via substitution.
Oil prices rose on Tuesday on supply fear, as Iran denied it had talks with the United States to end the war in the Gulf, contradicting US President Donald Trump, who said a deal could be reached soon. Data on Tuesday showed Japan’s core consumer inflation rate hit 1.6percent in February to slide below the Bank of Japan’s 2percent target for the first time in nearly four years, making further interest rate hikes harder to justify. The front-month rubber contract on the Singapore Exchange’s SICOM platform for April delivery last traded at 360.7 US cents per kg, up 1.2percent as of 0708 GMT.
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