SINGAPORE: Japanese rubber futures eased on Wednesday as weak demand weighed on the market, although higher crude oil prices and a weak yen limited the drop in prices. The Osaka Exchange (OSE) rubber contract for December delivery closed down 2.6 yen, or 0.78%, at 331.4 yen ($2.05) per kg.
The September rubber contract on the Shanghai Futures Exchange (SHFE) rose 60 yuan to 15,105 yuan ($2,076.75) per metric ton.
Soft manufacturing data from top rubber consumer China has led to a “dominant negative influence of a weak physical demand” on trader sentiment, said Jom Jacob, chief analyst at Indian analysis firm What Next Rubber. Overall sentiment in both physical and futures markets for natural rubber is “bearish, or almost muted”, said Jacob.
Oil prices rose after industry data showed a bigger-than-expected draw in US crude stockpiles, while the market kept tabs on flaring tensions in the Middle East. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
The yen weakened to a fresh 38-year trough to the dollar and a record low to the euro, continuing its downward grind, with Japanese officials largely remaining on the sidelines amid the risk of intervention. A weaker currency makes yen-denominated assets more affordable to overseas buyers.
The front-month rubber contract on the Singapore Exchange’s SICOM platform for August delivery last traded at 169.3 US cents per kg, down 0.6%.
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