SINGAPORE: Japanese rubber futures fell on Tuesday, due to a strengthening yen and weaker oil prices as tensions in the Middle East eased.
The Osaka Exchange (OSE) rubber contract for December delivery closed down 7 yen, or 2.33%, at 293.4 yen ($2.02) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery weakened 220 yuan, or 1.58%, to 13,665 yuan ($1,903.92) per metric ton.
The most active July butadiene rubber contract on the SHFE slumped 355 yuan, or 3.06%, to 11,230 yuan ($1,564.66) per ton. The dollar weakened 0.47% against the yen. A stronger currency makes yen-denominated assets less affordable to overseas buyers. Oil prices tumbled about 5% after Israel agreed to U.S President Donald Trump’s ceasefire proposal with Iran. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Still, Japan’s Nikkei rose more than 1%, following Trump’s announcement.
Flash floods in Thailand ended a second consecutive decline in Japan rubber on Monday, said broker Hexun Futures. Top rubber producer Thailand’s meteorological agency warned of heavy rains and accumulations that could lead to flash flooding from June 24-27. China’s auto industry has inflated car sales for years through registering new cars right off the assembly line and then shipping them overseas as “used” vehicles, Reuters reported.
This is allowing production to outpace demand, driving a protracted domestic price war in the world’s largest car market. The front-month rubber contract on Singapore Exchange’s SICOM platform for July delivery last traded at 159.1 US cents per kg, down 1.2%.
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