SHANGHAI: Japanese rubber futures edged upwards on Wednesday, as tight supply and higher prices of synthetic rubber spurred increased demand for natural rubber.
The Osaka Exchange (OSE) rubber contract for August delivery was up 0.1 yen, or 0.03percent, at 375 yen (USD2.37) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 275 yuan, or 1.63percent, to 17,180 yuan (USD2,503.68) per metric ton.
The most active April butadiene rubber contract on the SHFE gained 815 yuan, or 5.51percent, to 15,615 yuan (USD2,275.61) per metric ton. As the Strait of Hormuz remains impeded, concerns over Middle East demand for Chinese tyres could weigh down prices for the next one or two months as importers postpone orders, Gao Ning, a senior analyst at Qisheng Futures said in a note.
Natural rubber prices continue to be supported as people substitute synthetic rubber with natural rubber, he added. Synthetic rubber is made from crude oil. However, run cuts and force majeure notices at several Asian refineries have led to expectations of tight butadiene rubber supply, a note from Chinese broker Everbright Futures said.
Tightening liquidity, hindered export routes, inflationary pressures and risk aversion continue to weigh on the minds of traders and curb upside, according to a note from Chinese broker Nanhua Futures.
Oil prices fell further on Wednesday, on reports of the International Energy Agency proposing the largest release of oil reserves in its history due to potential supply disruptions from the US-Israeli war with Iran.
The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 198.8 US cents per kg, down 0.2percent as of 0700 GMT.