SHANGHAI: Japanese rubber futures erased early losses to post a weekly gain on Friday, as persistent concerns over flooding in top producer Thailand and a strengthening El Niñoweather pattern raised supply worries.
The Osaka Exchange (OSE) rubber contract for March delivery was up 2.1 yen, or 0.46 percent, at 459.8 yen (USD2.91) per kg. The contract gained 1.95 percent this week. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 580 yuan, or 2.89 percent, to 20,645 yuan (USD3,083.32) per metric ton.
The most-active November butadiene rubber contract on the SHFE gained 415 yuan, or 2.52 percent, to 16,880 yuan per ton. Several Thai auto parts suppliers have halted operations due to flooding in the country, disrupting deliveries to automakers including Toyota and Isuzu, industry officials said on Thursday.
Rain in producing regions has been persistent and heavy, and is expected to continue until mid-October, limiting rubber output, analysts from broker Everbright Futures said in a note. Combined with El Niño expectations, rubber prices still have room to rise further, the analysts said.
This year’s El Niño will intensify before peaking in December and is nearly 100percent certain to last until February 2027, the World Meteorological Organization said in its monthly climate bulletin on Thursday. Top consumer China’s semi-steel tyre production rate fell to 28.48 percent on October 8, from 46.37 percent the previous week, while the all-steel tyre production rate dropped to 28.97 percent from 39.01percent, data from rubber information provider Qinrex showed.
The National Day holiday led to increased factory shutdowns and production halts, with orders weak and purchasing sentiment cautious, analysts from broker Tianfeng Futures said in a note. The front-month rubber contract on Singapore Exchange’s SICOM platform for January delivery last traded at 263.1 US cents per kg, up 2.5 percent as of 0710 GMT. It hit its highest since May 10, 2013, earlier in the day.
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