Japanese rubber rises as higher oil prices offset soft Chinese tyre demand

SHANGHAI: Japanese rubber futures rose in afternoon trade on Thursday, as a rebound in oil prices countered concerns over soft Chinese tyre and auto demand.

The Osaka Exchange (OSE) rubber contract for January delivery was up 1.6 yen, or 0.38percent, at 420.9 yen (USD2.67) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery rose 190 yuan, or 1.14percent, to 16,895 yuan (USD2,503.45) per metric ton.

The most active September butadiene rubber contract on the SHFE gained 225 yuan, or 1.77percent, at 12,955 yuan per metric ton.

Oil prices climbed on Thursday as investors remained cautious on the outcome of Iran-Oman talks and whether they will restore flows via the Strait of Hormuz, while reports of attacks on Saudi tankers in the Red Sea and Gulf of Aden renewed supply tensions.

Natural rubber often takes direction from oil prices, as it competes for market share with synthetic rubber, which is made from crude oil.

However, gains were limited by concerns about soft demand in China, the world’s largest rubber consumer.

China’s passenger car retail sales fell 18percent year-on-year and 6percent month-on-month to 1.51 million units in July, preliminary statistics from the China Passenger Car Association showed.

Capacity utilisation at Chinese all-steel tyremakers’ fell 1.62 percentage points month-on-month to 63.8percent in July as some producers scheduled maintenance at month-end, with overall tyre shipments running below expectations on insufficient new orders, analysts from broker GF Futures said in a note, citing sample company data.

The front-month rubber contract on Singapore Exchange’s SICOM platform for October delivery last traded at 216.4 US cents per kg, down 0.1percent as of 0700 GMT.