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SINGAPORE: Japanese rubber futures surged on Monday, buoyed by market talk that China, the world’s biggest consumer, is planning to purchase rubber for its national reserves.

The Osaka Exchange (OSE) October rubber contract closed up 11.1 yen, or 3.54%, at 324.5 yen ($2.24) per kg. Earlier in the session, prices reached 327.2 yen, their highest levels since April 4. Meanwhile, the Shanghai Futures Exchange’s (SHFE) September rubber contract dipped 20 yuan, or 0.13%, to 15,005 yuan ($2,079.87) per metric ton.

The most active June butadiene rubber contract on the SHFE eased 15 yuan, or 0.12%, to 12,240 yuan ($1,696.61) per ton. Chinese state reserves are planning to buy Ribbed Smoked Sheet (RSS) rubber for stockpiling, three traders said.

Reuters has yet to verify the market discussions. Meanwhile, with the easing of Sino-US tariffs, export expectations have improved, and the operating rate of downstream tire companies has picked up, said broker Hexun Futures. Last week, US and China agreed to a 90-day pause on their trade war, during which both countries would sharply lower trade duties.

The main rubber production areas in Thailand are in the early stages of harvesting, and we expect the supply of raw materials to increase in June, added Hexun. Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September. Nissan is considering plans to shut two car assembly plants in Japan and overseas factories, sources said on Saturday. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres. Broadly, China’s industrial output in April grew 6.1% from a year earlier, slowing from 7.7% growth in March, official data showed on Monday.

The front-month June rubber contract on Singapore Exchange’s SICOM platform last traded at 173.7 US cents per kg, up 0.8%.

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