SHANGHAI: Japanese rubber futures rose for the fourth straight session on Friday on the back of firm physical prices in Thailand, while Shanghai butadiene rubber futures hit another record high on tight supply of naphtha feedstock.
The Osaka Exchange (OSE) rubber contract for September delivery was up 1.3 yen, or 0.35percent, at 374.2 yen (USD2.34) per kg. It gained 1.96percent this week. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 55 yuan, or 0.33percent, to 16,510 yuan (USD2,388.84) per metric ton.
The most-active May butadiene rubber contract on the SHFE rose 10 yuan, or 0.06percent, to 17,840 yuan per ton. Prices of Thailand’s benchmark export-grade smoked rubber sheet (RSS3) were 1.24percent higher, while those of block rubber were down 0.77percent.
However, both gained about 4.5percent this week. Butadiene rubber prices on the Shanghai Futures Exchange hit an all-time high and continued to trade above the natural rubber contract.
Synthetic rubber prices have surged recently due to the tightening supply of feedstock naphtha, which is made from crude oil. In China, the top producer of synthetic rubber, output is poised to fall to 80,000 tons in April from 115,000 tons in March, said Xinghua Jing, an analyst at Sublime China Information (SCI).
However, as the SHFE-monitored warehouses still have ample stocks of butadiene rubber, and demand for tyres in the Middle East has fallen, there hasn’t been a drastic change in butadiene rubber fundamentals.
Therefore, traders should be wary of a correction if demand for natural rubber rises due to substitution, Chinese broker Galaxy Futures said in a note.
The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 199.1 US cents per kg, up 0.7percent, as of 0700 GMT.