Japanese rubber futures snap 3-day losing streak on Shanghai gains

SINGAPORE: Japanese rubber futures inched higher to snap a three-session losing streak on Wednesday, tracking gains in the Shanghai market and stronger domestic equities, while a firmer yen added pressure.

The Osaka Exchange (OSE) rubber contract for July delivery was up 0.2 yen, or 0.1%, at 220.2 yen ($1.66) per kg as of 0210 GMT, after hitting its lowest since Jan. 4 at 217.7 earlier in the session.

The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was up 30 yuan, or 0.2%, at 12,590 yuan ($1,844) per tonne. Japan’s benchmark Nikkei share average opened up 0.30%.

The US dollar climbed to a six-week high of 133.30 yen and sat not far below that at 132.66, up about 0.3% early in the Asia session. A stronger yen reduces the value of yen-based rubber in a dollar base and normally encourages investors to sell rubber futures on the OSE.

Oil prices slipped in early Asian trade after falling by more than $1 a barrel in the previous session, as industry data pointed to a much bigger-than-expected surge in US crude inventories.

The natural rubber market is hindered by weaker oil prices as manufacturers are disincentivised from shifting away from synthetic rubber that is derived from oil, driving natural rubber prices lower.

The S&P 500 ended Tuesday’s volatile session slightly lower while the dollar was barely higher on Tuesday after data showed US consumer inflation stayed sticky in January, pushing out expectations for a Federal Reserve rate-hiking pause.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 138.2 US cents per kg, up 0.4%.