SINGAPORE: Japanese rubber futures fell on Friday as elevated raw material costs and falling processed rubber prices squeezed producer margins.
The Osaka Exchange (OSE) rubber contract for February delivery lost 1.5 yen, or 0.47 percent, to 317.5 yen (USD2.15) per kg as of 0235 GMT. It has lost 2.04 percent so far this week. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery shed 45 yuan, or 0.28 percent, to 15,835 yuan (USD2,223.74) per metric ton. The most active October butadiene rubber contract on the SHFE fell 100 yuan, or 0.86 percent, to 11,565 yuan per metric ton.
Higher raw material costs and declining prices of processed rubber are likely to compress producer margins, while buyers are cautious and waiting for price stability before re-entering the spot market, said Farah Miller, founder of independent rubber-focused firm Helixtap Technologies.
Oil prices extended losses on oversupply concerns. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
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