Japan, Shanghai rubber futures decline on weaker tyre demand
- OSE rubber contract for October delivery was down 0.5 yen, or 0.12%, at 413.1 yen per kg
Japanese rubber futures fell on Monday, tracking losses in Chinese rubber futures, as sluggish tyre demand and high inventories weighed on prices.
The Osaka Exchange (OSE) rubber contract for October delivery was down 0.5 yen, or 0.12%, at 413.1 yen ($2.63) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery declined 120 yuan, or 0.67%, to 17,865 yuan ($2,629.14) per metric ton.
The most active June but adiene rubber contract on the SHFE fell 50 yuan, or 0.32%, to 15,455 yuan per metric ton.
Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 3.8% week-on-week, according to data released by the exchange on Friday.
Both domestic and export demand for Chinese car tyres remains weak, as the easing of European anti-dumping and countervailing duties has not translated into increased downstream tyre exports, according to Zhang Zhenghua, rubber analyst at Chinese broker Minmetals Futures.
Inventory absorption is slow, while the demand outlook for tyre exports remains muddied by the Iran war, Zhang added in his note on WeChat.
Additionally, thunderstorms in the top producer, Thailand, are expected to ease from May 12-16, according to the country’s meteorological agency.
However, firm oil prices underpinned rubber prices, as natural rubber often follows crude prices because it competes with synthetic rubber, which is made from crude oil.
Oil prices rallied on Monday, a day after President Donald Trump said Iran’s response to a U.S. proposal was “unacceptable,” raising supply fears amid the Strait of Hormuz, which remained largely closed, keeping the global market tight.
The front-month rubber contract on Singapore Exchange’s SICOM platform for June delivery last traded at 222.6 U.S. cents per kg, up 0.8%, as of 0710 GMT.
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