Japanese rubber futures log four-day losing streak on sluggish buying, stronger yen

SINGAPORE: Japanese rubber futures continued a four-day losing streak as market sentiment was sluggish amid the Lunar New Year holiday in top consumer China, with a stronger yen pressuring prices lower.

The Osaka Exchange (OSE) rubber contract for July delivery was down 1.9 yen, or 0.55percent, at 345.2 yen (USD2.25) per kg. Lunar New Year holidays in both China and Singapore have led to low market liquidity, with trading volumes on the Osaka and Singapore exchanges remaining sluggish, according to LSEG-compiled data.

The yen held around 153.00 against the dollar, after Japan reported its economy grew a miserly 0.1 percent annualised in the December quarter, far below the 1.6percent gain forecast as government spending dragged on activity.

A stronger currency makes yen-denominated assets less affordable to overseas buyers. Oil prices traded sideways ahead of talks between Washington and Tehran, with concerns about Iran-US tensions disrupting oil flows keeping a floor under prices, while OPEC+ leans in favour of resuming output hikes from April.

Natural rubber often follows oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Market sentiment was also underpinned by expectations of an early wintering season in the Northern Hemisphere, which could tighten raw material supply and support prices, according to a report from the Japan Exchange Group. Rubber crops usually experience a period of low production from February to May, before a peak harvest period that lasts until September.

The Shanghai Futures Exchange will be closed over the February 16-23 period for the Lunar New Year holiday in China, the bourse said. Trading will resume on February 24.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery closed trade at 193 US cents per kg, up 0.1percent. The Singapore Exchange traded for half a day on February 16 and will be closed on February 17-18 for the holiday.