SINGAPORE: Japanese rubber futures fell on Monday as higher inventories, lower tyre production and pessimism on electric vehicle demand outweighed the impact of higher oil prices.
The Osaka Exchange (OSE) rubber contract for July delivery closed down 4.7 yen, or 1.64%, at 282.0 yen ($1.91) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 140 yuan to end at 13,560 yuan ($1,888.18) per metric ton.
Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.9% from last Friday, marking their ninth straight week-on-week increase.
Some tyre manufacturers in Shandong’s Dongying and Weifang regions have planned to wrap up productions by end-January in view of the upcoming holiday period, China-based consultancy Longzhong reported. Shandong is a significant hub for tyre manufacturing in China.
U.S. new vehicle sales are expected to fall 1.5% in January year-on-year on seasonally slower sales and signs of cooling demand for electric vehicles (EV), a report by industry consultants J.D. Power and GlobalData said.
On Friday, South Korean battery maker LG Energy Solution rojected deceleration in the global EV market for this year.
Bank of America Global Research has revised down its forecasts for both sales and market share of EVs.
Oil prices jumped on fuel supply concerns after a missile struck a Trafigura-operated fuel tanker in the Red Sea. Further, concerns of a fall in Russian refined products exports surfaced as several refineries undergo repairs following drone attacks.
Asian stocks started the week with a rally, as new steps by Chinese regulators to stabilize the local market outweighed the drag on sentiment from the liquidation of property giant China Evergrande.
Japan’s benchmark Nikkei average closed up 0.77%.
The Japanese yen strengthened 0.22% to 147.87 against the dollar.
The front-month rubber contract on Singapore Exchange’s SICOM platform for February delivery last traded at 151.90 U.S. cents per kg, down 0.72%.
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