SINGAPORE: Japanese rubber futures fell for a second session on Monday, with focus on demand in top consumer China to provide a floor under the market.
The Osaka Exchange (OSE) rubber contract for November delivery ended down 4.5 yen, or 1.3%, at 336.5 yen per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) closed down 310 yuan, or 2%, at 15,145 yuan per metric ton.
China’s factory activity grew the fastest in about two years in May due to production gains and new orders, particularly at smaller firms, a private sector survey showed on Monday, lifting the outlook for the second quarter. The upbeat Caixin PMI contrasts with an official PMI survey on Friday that showed a surprise fall in manufacturing activity. Oil prices were little changed on Monday, as investors weighed a move by producer group OPEC+ to extend deep output cuts well into 2025. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
Japan’s Nikkei share average rose, tracking Wall Street higher as a US inflation report supported expectations for interest rate cuts in the world’s largest economy this year. The dollar was broadly steady as traders wagered that US inflation may have stabilised enough for the Federal Reserve to cut rates later in 2024, while the euro was calm ahead of the expected cut from the European Central Bank this week.
The front-month rubber contract on Singapore Exchange’s SICOM platform fell 2.2% to 174.9 US cents per kg.
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