SHANGHAI: Japanese rubber futures snapped a two-day winning streak on Thursday, marking its biggest drop in more than one week, amid lower oil prices and concerns that intensifying price competition in China’s automotive sector could pressure prices.
The Osaka Exchange (OSE) rubber contract for December delivery ended daytime trade down 2.5 yen, or 0.8%, at 310.5 yen ($2.16) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery dipped 75 yuan, or 0.53%, to 14,015 yuan ($1,956.88) per metric ton.
The most active August butadiene rubber contract on the SHFE fell 45 yuan, or 0.4%, to 11,185 yuan ($1,561.74) per metric ton. Oil prices eased, reversing gains from the previous session, on concerns that potentially higher US tariffs being reinstated could lower fuel demand. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
A notable Chinese Communist Party publication urged for stricter measures against competitive practices that lead to price wars in the automobile sector in China.
This follows appeals from car dealers, who have urged automakers to revise their sales strategies that compel dealers to sell new cars at prices below cost. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres. Lower automobile prices, driven by fierce competition, exert a downward pressure on rubber tyre prices.
The yen weakened slightly to 143.84 per dollar. A stronger currency makes yen-denominated assets less affordable to overseas buyers. Japan’s Nikkei share gauge eked out a small gain even as uncertainty over a trade deal with the United States and the threat of heavy tariffs kept a lid on investor optimism.
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