Japan rubber futures decline on higher natural, synthetic supply prospects

Japanese rubber futures declined on Monday as expectations of higher natural and synthetic rubber supply, along with elevated inventories in top consumer China, weighed on prices across exchanges.

The Osaka Exchange (OSE) rubber contract for November delivery  was down 4.9 yen, or 1.14%, at 424.7 yen ($2.65) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery fell 340 yuan, or 1.9%, to 17,565 yuan ($2,588.00) per metric ton.

The most active July butadiene rubber contract on the SHFE fell 170 yuan, or 1.21%, to 13,850 yuan per metric ton.

Rubber inventories in warehouses monitored by the SHFE rose 1% week-over-week, the exchange said on Friday.

Higher prices and sufficient rainfall in top producer Thailand are expected to boost rubber tapping and increase supply, several Chinese brokers said.

Operating rates at Chinese butadiene rubber factories have also increased as several synthetic rubber plants complete maintenance, which is expected to lift synthetic rubber supply, Chinese broker Tianfu Futures said in a note.

In addition, automobile demand typically declines in the summer as vacations divert consumers away from the market, which could weigh on tire prices.

Global rubber exchanges ended the previous week at multi-year highs, supported by speculative buying amid supply-side uncertainties and ongoing logistical disruptions stemming from the Iran war, Japan Exchange Group said in a report on Monday.

Trading activity increased across all major exchanges, with the SHFE market primarily driven by short covering last week, the report added.

The front-month rubber contract on Singapore Exchange’s SICOM platform for July delivery last traded at 225.5 U.S. cents per kg, down 2.1% as of 0706 GMT.