SINGAPORE: Japanese rubber futures ended flat on Thursday, as investors assessed the impact of a delay in a key EU deforestation law, while a lack of fresh stimulus from a key policy briefing in top consumer China also weighed on prices.
The March Osaka Exchange (OSE) rubber contract closed flat at 385.5 yen ($2.58) per kg. The January rubber contract on the Shanghai Futures Exchange (SHFE) fell 325 yuan, or 1.8%, to 17,740 yuan ($2,489.44) per metric ton.
European Union ambassadors agreed on Wednesday to delay the implementation of the bloc’s landmark deforestation law by a year till the end of December 2025.
The law, known as EUDR, will require companies importing products, including rubber, to prove their supply chains did not contribute to the destruction of the world’s forests. Companies that have paid to source agricultural produce complying with the law will lose out from the delay, industry groups and traders said.
As the EU parliament still needs to sign off on the law, the market is wondering if its final iteration would involve a 12-month delay or longer, said Farah Miller, founder of independent rubber-focused data firm Helixtap Technologies.
EUDR spot premiums will be lower, while traders will try to understand how to price cargoes loading in 2025, Miller said. “These are all uncertainties which would make negotiation of spot and long-term contracts tricky for both buyers and sellers in the coming months,” Miller said.
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