SHANGHAI: Japanese rubber futures slipped to their lowest close in about a week on Monday, pressured by lower oil prices after a halt in US attacks on Iran, while a firmer yen and weakness in the Shanghai futures market also hurt.
The Osaka Exchange rubber contract for December delivery finished 2.0 yen, or 0.48percent, lower at 416.0 yen (USD2.6) per kg, its lowest close since last Tuesday. The rubber contract on the Shanghai Futures Exchange for September delivery fell 95 yuan to settle at 16,760 yuan (USD2,477) per metric ton.
“Selling pressure prevailed, driven by lower oil prices and expectations that the yen is unlikely to weaken beyond 164 per dollar,” said Jiong Gu, an analyst at Yutaka Trusty Securities. He added that production in Southeast Asia remains sluggish due to factors including El Niño, which is likely to keep near-term contracts trading within the 410-430 yen range.
Oil prices tumbled more than 6percent on Monday after the US and Iran paused strikes over the weekend after two weeks of attacks, raising hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume in the Strait of Hormuz.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The yen traded at 163.50 against the US dollar on Monday, compared with 163.83 in late Friday trade in Asia.
A stronger currency makes yen-denominated assets less affordable to overseas buyers. Japan’s Nikkei share average ended higher, helped by weaker oil prices, while investors stayed cautious before major earnings this week.
Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.5percent from a week earlier, data showed on Friday. Profits at China’s industrial firms grew at a solid, though slower, pace, as resilient exports helped cushion sluggish domestic demand, highlighting the economy’s uneven recovery despite policymakers’ efforts to spur consumption.
The front-month rubber contract on Singapore Exchange’s SICOM platform for August delivery last traded at 217.9 US cents per kg, up 0.4percent.