SINGAPORE: Japanese rubber futures fell on Friday amid subdued Chinese demand, but registered monthly gains as a weaker yen supported prices.
The Osaka Exchange (OSE) rubber contract for April delivery was down 2.4 yen, or 0.77 percent, at 311 yen (USD2.06) per kg. Still, the contract gained 1.73percent this month, reversing a two-month decline. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery lost 410 yuan, or 2.65 percent, to 15,085 yuan (USD2,117.79) per metric ton.
The most active December butadiene rubber contract on the SHFE fell 185 yuan, or 1.72 percent, to 10,585 yuan per metric ton. China’s factory activity shrank for a seventh month in October, an official survey showed on Friday, under scoring weak domestic demand in the world’s second-largest economy.
The yen slid to its weakest against the dollar since February as the Bank of Japan kept interest rates steady. A weaker currency makes yen-denominated assets more affordable to overseas buyers. Oil prices eased on a stronger dollar and rising supply from major producers globally.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. As major producing regions both domestically and internationally transition to peak production season, improved weather conditions will facilitate a faster increase in raw material supply, further suppressing rubber prices, said Chinese broker CICC Wealth Futures. Also weighing on prices is the Nexperia chip crisis, which has caused automakers worldwide to scramble for alternatives or cut production. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber tyres. The front-month rubber contract on Singapore Exchange’s SICOM platform for November delivery last traded at 174 US cents per kg, down 0.4 percent.
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