SINGAPORE: Japanese rubber futures snapped a four-session rally on Monday as U.S. President Donald Trump’s tariffs on Canada, Mexico, and China fuelled trade war concerns, though a softer yen and supply snags limited the fall.
The Osaka Exchange (OSE) rubber contract for July delivery ended daytime trade 3.4 yen lower, or 0.86%, at 391 yen ($2.52) per kg.
Trump on Saturday imposed 25% tariffs on goods from Mexico and Canada and 10% on Chinese imports.
Automakers were among the hardest hit by Trump’s tariffs, with Japanese and South Korean car makers and their suppliers leading declines in Asia.
Vehicle sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres.
In response to tariffs, China’s initial proposal will centre on restoring the “Phase 1” trade deal signed in 2020 during Trump’s first term, the Wall Street Journal reported.
Japanese rubber futures up on supply worries
Meanwhile, Chinese stocks listed in Hong Kong slid and the yuan sank to a record low in offshore trade on fears of a trade war.
Chinese financial markets are shut for the Lunar New Year holidays and will resume trading on Feb. 5.
Still, the rubber market currently appears supported by a strong U.S. dollar and a relatively weaker Japanese yen, said a Singapore-based trader.
The dollar surged and the yen slid slightly to 155.59 per dollar.
A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers.
In top producer Thailand, the northeast monsoon will strengthen with isolated thundershowers in the south from Feb. 4 to Feb. 9, the country’s meteorological agency said.
The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 197.1 U.S. cents per kg, down 1.1%.
“With China still on holiday, significant volatility and movement are expected once Chinese traders return, given their strong speculative influence in the market,” the Singapore-based trader said.
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