SINGAPORE: Japanese rubber futures fell on Monday, tracking losses in the Shanghai market amid an increase in inventory stockpiles, while weaker domestic equities added pressure.

The Osaka Exchange rubber contract for July delivery was down 1.6 yen, or 0.7%, at 220.7 yen ($1.64) per kg as of 0200 GMT. The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was down 55 yuan, or 0.4%, at 12,485 yuan ($1,817) per tonne.

The benchmark SHFE contract hit its lowest since Nov. 8 at 12,345 yuan per tonne earlier in the session. Japan’s benchmark Nikkei share average opened down 0.06%. Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.0% from a week earlier, the exchange said on Friday.

Rubber markets are waiting for signs of a demand pick-up in top buyer China after the country lifted its strict COVID curbs at the end of 2022. Oil prices were little changed in early Asian trade, after settling down $2 a barrel on Friday, as rising supplies in the United States and forecasts of more interest rate hikes cooled optimism over China’s demand recovery.

The natural rubber market is hindered by weaker oil prices as manufacturers are disincentivised from shifting away from synthetic rubber that is derived from oil, driving natural rubber prices lower.

Asian shares got off to a subdued start, as a US holiday made for slow trading ahead of minutes of the last Federal Reserve meeting and a reading on core inflation that could add to the risk of interest rates heading higher for longer.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 137.8 US cents per kg, up 0.3%.