TOKYO: Japanese rubber futures rose on Friday as expectations of lower US interest rates next year boosted hopes for economic growth and an increase in demand for the material, leading to a small weekly gain.
The Osaka Exchange (OSE) rubber contract for May delivery ended 1.9 yen, or 0.8%, higher at 238.1 yen ($1.7) per kg, recovering from an around two-month low hit the previous day.
The benchmark booked a 0.3% weekly gain, the first increase in four weeks. The rubber contract on the Shanghai futures exchange (SHFE) for May delivery rose 90 yuan to finish at 13,520 yuan ($1,903) per metric ton. “Growing prospects of US rate cuts improved market sentiment, especially as other commodity prices were up,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. “Higher Shanghai rubber market also provided support,” he said.
Fed Chair Jerome Powell said on Wednesday that the historic tightening of US monetary policy was likely over as inflation falls faster than expected, with a discussion of cuts in borrowing costs coming “into view.” Oil prices rose on Friday, set to notch their first weekly gain in two months after benefiting from a bullish forecast by the International Energy Agency (IEA) on oil demand for next year and a weaker dollar. The US dollar was quoted around 141.68 yen, compared with about 141.42 yen on Thursday afternoon. Japan’s benchmark Nikkei average was up 1.3%.
China’s property sector worsened in November as negative home buyer sentiment and indebted developers drove down sales and investment, while broader retail sector activity missed forecasts, suggesting more support is needed to shore up demand. Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 6.3% from last Friday, the exchange said on Friday.
The front-month rubber contract on Singapore Exchange’s SICOM platform for January delivery last traded at 144.8 US cents per kg, up 0.6%.
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