SINGAPORE: Japanese rubber futures hit a 13-year high on Wednesday, buoyed by prospects of tight supply from top producer Thailand and stronger demand from top consumer China.
The Osaka Exchange (OSE) rubber contract for January delivery closed up 11.8 yen, or 3.28%, at 371.8 yen ($2.57) per kg, marking its seventh session of gains in a row. The contract hit an intraday high of 373.0 yen, its strongest level since Sept. 1, 2011. The January rubber contract on the Shanghai Futures Exchange (SHFE) rose 335 yuan, or 2.04%, to finish at 16,755 yuan ($2,349.34) per metric ton.
Rain in Thailand continues to impact raw material supplies, keeping prices firm, while rising demand from China is also supporting prices, said a Singapore-based trader.
Top rubber producer Thailand’s meteorological agency warned of heavy to very heavy rains that may cause flash flood and overflows on Aug. 28 and Sept. 1-3. To continue this run in rubber prices, it needs to be combined with macro tailwinds, such as consistent rate cuts from the US Federal Reserve and China’s economic recovery, said Farah Miller, CEO of independent rubber-focused data firm Helixtap Technologies.
“OSE is very closely correlated to RSS3 and Thai grades, so it seems that the factors in the physical market are playing out now in the futures, and traders and funds are continuing this momentum,” Miller said.
Thailand’s benchmark export-grade smoked rubber sheet (RSS3) and block rubber were up 2.41% and 0.56% at 93.6 baht ($2.75) and 67.57 baht ($1.99), respectively. The front-month September rubber contract on Singapore Exchange’s SICOM platform last traded at 182.0 US cents per kg, up 0.6%.
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