SHANGHAI: Japanese rubber futures eased on Thursday as peak-season supply increased and weak tyre demand weighed on prices.
The Osaka Exchange (OSE) rubber contract for April delivery was down 4.3 yen, or 0.98 percent, at 436.5 yen (USD2.73) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 240 yuan, or 1.25 percent, to 19,435 yuan (USD2,914.71) per metric ton.
The most-active January butadiene rubber contract on the SHFE gained 445 yuan, or 2.93 percent, to 15,630 yuan per ton.
Top producer Thailand is emerging from the rainy season into its peak harvesting period, boosting supply, while tyre production remains weak compared to a year earlier, both of which are weighing on prices, analysts at broker Shenyin Wanguo Futures said in a note.
China’s domestic passenger vehicle sales are projected to fall below 19 million units this year, for the first time since 2014, a Chinese auto association said on Wednesday, highlighting weakening demand in the world’s largest auto market.
Weaker automobile sales may affect the pace of vehicle manufacturing, which drives demand for rubber tyres. Wednesday’s sharp rise in Shanghai rubber futures was likely triggered by a World Meteorological Organisation report on El Niño, analysts from broker Minmetals Futures said in a note.
However, there is no evidence yet of large-scale production cuts, and the weather premium could dissipate quickly if peak-season output materialises as normal, the analysts said.
The front-month rubber contract on the Singapore Exchange’s SICOM platform for February delivery last traded at 247 US cents per kg, down 0.2 percent as of 0700 GMT.
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