SINGAPORE: Japanese rubber futures sustained earlier gains on Friday to log their biggest weekly rise in two months, buoyed by global supply pressures, while stronger US economic data also lifted global investor sentiment.
The Osaka Exchange (OSE) rubber contract for January delivery closed up 5.7 yen, or 1.76%, at 328.9 yen ($2.21) per kg. It rose 2.14% from the week before, posting its largest week-on-week gain since June 7. The January rubber contract on the Shanghai Futures Exchange (SHFE) closed up 135 yuan, or 0.85%, to 16,060 yuan ($2,238.83) per metric ton, finishing at its highest since June 11. Physical rubber markets across Southeast Asia are supported by an “unusually weak supply” during a period normally considered the season of peak global supply, said Jom Jacob, chief analyst at Indian analysis firm What Next Rubber.
Global demand prospects are improving more than expected, with an array of US economic data this week providing strong evidence of resilience in the world’s largest economy, although worries over persistent weakness in China’s economic recovery will cap gains in natural rubber prices, added Jacob.
Top producer Thailand’s meteorological agency warned of heavy rains that may cause flash floods from Aug. 16-22.
Seasonal supply pressures are increasing as domestic and overseas production areas have been fully harvested, said Chinese financial information site Hexun Futures in a note.
The dollar hovered not far from a two-week high to the yen on Friday, as firm US economic data all but eliminated fears of a recession.
A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers.
Japan’s benchmark Nikkei was poised for its best week in over four years as upbeat risk sentiment spilled over from Wall Street.
The front-month September rubber contract on Singapore Exchange’s SICOM platform last traded at 172.5 US cents per kg, down 0.3%.
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