SHANGHAI: Japanese rubber futures fell on Wednesday, pressured by a stronger yen and expectations that raw material cost support will weaken.
The Osaka Exchange (OSE) rubber contract for March delivery was down 3.3 yen, or 0.73 percent, at 448.8 yen (USD2.84) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery fell 125 yuan, or 0.63 percent, to 19,685 yuan (USD2,947.52) per metric ton.
The most active November butadiene rubber contract on the SHFE was little changed at 15,690 yuan per metric ton. The yen held on to most of the previous session’s sharp gains on Wednesday, with the greenback little changed at 158.16 yen, after an auction of longer-dated Japanese government bonds drew record demand.
A stronger currency makes yen-denominated assets less affordable to overseas buyers. Thai raw material prices are expected to ease in October, barring unforeseen weather disturbances, weakening cost support for natural rubber, analysts from broker GF Futures said in a note. Tyre production is expected to stay low, with operating rates below the same period in previous years, while spot and social inventories in Qingdao continue to accumulate, the analysts said.
Upstream factories’ willingness to purchase raw materials at elevated prices has declined, analysts from broker Huatai Futures said in a note.
Downstream tyre manufacturers are holding low raw material inventories and continuing to draw down finished product stock, signalling limited acceptance of current prices, the Huatai analysts added.
The front-month rubber contract on Singapore Exchange’s SICOM platform for January delivery last traded at 251 US cents per kg, down 0.8 percent as of 0713 GMT.
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