SHANGHAI: Japanese rubber futures advanced on Monday, as oil surged amid the Iran war, with the most active Shanghai butadiene rubber contract hitting the upper limit, while strong fundamentals and a weaker yen also lent support. The Osaka Exchange (OSE) rubber contract for August delivery closed 8.7 yen, or 2.34percent, higher at 380 yen (USD2.40) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 240 yuan, or 1.44percent, to 16,895 yuan (USD2,444.23) per metric ton.
The most active April butadiene rubber contract on the SHFE rose 1,305 yuan, or 8.98percent, to 15,835 yuan per metric ton, after hitting the upper trading limit earlier in the session. Oil prices surged more than 25percent to their highest since mid 2022 as some major producers cut supplies and fears of prolonged shipping disruptions gripped the market amid an escalating US-Israeli war with Iran. Natural rubber often follows oil prices as it competes with synthetic rubber, which is made from crude oil. “Rubber prices are currently supported by strong fundamentals and higher oil prices,” a Singapore-based rubber trader told Reuters.
A strong rally in butadiene rubber prices may encourage substituting synthetic rubber with natural rubber, the trader added. However, a slowing global economy raises concerns about whether demand can remain resilient, and the material’s outlook would depend on how long the war persists, the trader said. The yen rose 0.55percent to 158.70 against the greenback.
A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers. Global rubber futures ended last week lower across all exchanges amid long liquidation and profit-taking by commodity funds, Japan Exchange Group said in a report on Monday.
The front-month rubber contract on the Singapore Exchange’s SICOM platform for April delivery last traded at 197.6 US cents per kg, up 1percent as of 0700 GMT.