SINGAPORE: Japanese rubber futures surged on Monday, supported by higher oil prices, as traders assessed regulators’ attempt to contain risks in the global financial system.

The Osaka Exchange (OSE) rubber contract for August delivery was up 5.6 yen, or 2.8%, at 209.6 yen ($1.60) per kg, as of 0203 GMT. The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was up 195 yuan, or 1.67%, at 11,890 yuan ($1,727.52) per tonne. Japan’s benchmark Nikkei average opened 0.35% higher. Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.2 % from a week earlier, the exchange said on Friday. Profits at industrial firms in China declined 22.9% in the first two months of 2023 from the year before, official data showed on Monday, as the factory sector struggles to claw its way out of the slump caused by COVID-related disruptions.

Still, Chinese automakers are filling the gap as the exodus of Western carmakers narrowed options for Russian consumers. Oil prices climbed in early trade as concerns over turmoil in the banking sector appeared to have eased, while comments by Russian President Vladimir Putin over the weekend ratcheted up geopolitical tensions in Europe. The natural rubber market is helped by stronger oil prices as manufacturers are incentivised to shift away from synthetic rubber that is derived from oil, driving natural rubber prices higher. Asian shares struggled while US and European stock futures edged higher on hopes authorities were working to ring fence stress in the global banking system, even as the cost of insuring against default neared dangerous levels. The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 132.3 US cents per kg, up 0.9%.