Japan rubber futures snap four-day rally on stronger yen

Japanese rubber futures snapped a four-session winning streak on Tuesday, weighed down by a stronger yen, while firm spot prices and overseas buying supported Chinese and Singapore rubber prices.

In contrast, the Osaka Exchange (OSE) rubber contract for July delivery closed down 4.5 yen, or 1.27%, at 350.4 yen ($2.25) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 140 yuan, or 0.86%, to 16,335 yuan ($2,363.62) per metric ton.

The most-active March butadiene rubber contract on the SHFE rose 105 yuan, or 0.82%, to 12,860 yuan per ton.

The Japanese yen strengthened to 155.24 per U.S. dollar after rising 0.8% on Monday.

Verbal warnings from authorities helped strengthen the yen after the currency weakened in the immediate aftermath of Prime Minister Sanae Takaichi’s election victory.

A stronger currency makes yen-denominated assets less affordable to overseas buyers.

Meanwhile, firm raw material prices supported Chineseand Singapore natural rubber contracts by pushing up spot and break-even prices, a trader said.

Demand from factories outside China, which are generally willing to purchase raw materials at higher prices, also provided cost support, Gelin Dahua Futures said in a note.

However, prices may be pressured this week and the next due to a decline in rubber demand from tire manufacturers that are shutting down factories ahead of the Lunar New Year.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 190.9 U.S. cents per kg, up 0.5% as of 0701 GMT.

The Osaka Exchange is closed on Wednesday, February 11, for a holiday.