SINGAPORE: Japanese rubber futures fell for the sixth straight session on Wednesday, to hit their lowest in a month, as weaker Chinese manufacturing data and trade tensions surrounding Beijing outweighed prospects of a new outsized fiscal stimulus package from the top consumer.
The April Osaka Exchange (OSE) rubber contract closed down 9 yen, or 2.47%, at 356.0 yen ($2.32) per kg. The contract hit an intraday low of 355.3 yen, its weakest level since Sept. 24. The January rubber contract on the Shanghai Futures Exchange (SHFE) dipped 40 yuan, or 0.22%, finishing at 17,845 yuan ($2,502.88) per metric ton. China’s factory activity likely contracted in October for a sixth month, a Reuters poll showed on Tuesday, but by the tiniest of margins, backing officials’ optimism that recent fresh stimulus will get the world’s second-largest economy back on track.
Beijing is considering approving, next week, the issuance of over 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive its fragile economy. The planned total amount equates to over 8% of China’s economic output.
The European Union has decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3% at the end of its highest-profile investigation that has divided Europe and prompted retaliation from Beijing. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres.
The dollar-yen pair slipped 0.08% to 153.26, retreating from a three-month peak on Tuesday, as US bond yields rose and the yen remained pressured by political uncertainty since Japan’s ruling coalition lost its majority in parliament last weekend.
A stronger currency makes yen-denominated assets less affordable to overseas buyers. The front-month November rubber contract on the Singapore Exchange’s SICOM platform last traded at 194.2 US cents per kg, up 0.4%.
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