SHANGHAI: Japanese rubber futures declined on Thursday, as improved weather in key producing regions raised output expectations and weaker US manufacturing activity dampened sentiment. The Osaka Exchange (OSE) rubber contract for January delivery was down 2.8 yen, or 0.88%, at 317.1 yen ($2.16) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery gained 50 yuan, or 0.32%, to 15,525 yuan ($2,162.92) per metric ton.
The most active September butadiene rubber contract on the SHFE rose 25 yuan, or 0.22%, to 11,535 yuan ($1,607.04) per ton. Top rubber producer Thailand’s meteorological agency warned of severe conditions and accumulated rains that may cause flash floods and overflows from August 10-13. Still, weather conditions in rubber-producing regions have improved overall, leading to expectations of higher production volumes even as demand remains relatively weak, said Chinese broker Chaos Natural Research.
Japan’s top negotiator Ryosei Akazawa pressed the US to implement at an early date the agreed cut to auto tariffs, as part of Tokyo’s Washington deal, which lowered the existing tariffs on Japanese car imports to 15% from 27.5%.
Automobile sales could influence the intensity of vehicle manufacturing, which involves using rubber-made tyres. Broadly, US manufacturing PMI fell month-on-month in July to 48.0, in line with economists’ estimate of a slowdown in activity during the third quarter as the effects of import duties becomes more pronounced. Oil prices rose on signs of steady demand in the US, the world’s top oil consumer.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month rubber contract on the Singapore Exchange’s SICOM platform for September delivery last traded at 167.3 US cents per kg, up 0.1%.
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