Japan rubber futures rise on hopes for new stimulus, China fears linger

TOKYO: Japanese rubber futures rose on Friday on hopes of a new stimulus package from Japan’s next prime minister and continued support from the central bank, though fears of slower demand in top buyer China capped gains.

Osaka Exchange’s rubber contract for February delivery finished 1.6 yen higher at 204.0 yen ($1.9) per kg. For the week, it booked a 0.9% gain.

The Bank of Japan is set to maintain its massive stimulus next week, as supply bottlenecks caused by factory shutdowns in Asia weigh on an economy already wobbling from the hit to consumption from the pandemic.

Candidates vying to become Japan’s next prime minister promised to restore popular trust in the ruling party by tackling income disparity, the corona virus pandemic and climate change as they launched campaigns on Friday.

The rubber contract on the Shanghai futures exchange for January delivery fell 0.8 yuan to finish at 163.8 yuan ($25) per tonne.

The front-month rubber contract on Singapore’s SICOM exchange for October delivery last traded at 163.8 US cents per kg, down 0.5%.

Chinese data earlier this week suggested growth in the world’s second-largest economy will slow in the second half of this year.

International investors that have been piling into China in recent years are now bracing for one of its great falls as the troubles of over-indebted property giant China Evergrande come to a head.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.9% from a week earlier, the exchange said on Friday.

OSE will increase the number of contract months for the rubber futures to 12 from six from next Tuesday when the trading system will be upgraded to boost capacity. Japanese financial markets will be closed on Monday for a national holiday.