SHANGHAI: Japanese rubber futures fell on Friday, following a drop in oil prices, while softer demand for downstream tires weighed on the market, though the contract gained for a second consecutive week.
The Osaka Exchange (OSE) rubber contract for February delivery was down 1.8 yen, or 0.41percent, at 442.6 yen (USD2.78) per kg.
The contract gained 0.82percent this week. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 280 yuan, or 1.5percent, to 18,940 yuan (USD2,818.03) per metric ton. The most active October butadiene rubber contract on the SHFE gained 270 yuan, or 1.9percent, to 14,480 yuan per metric ton.
Oil prices fell on Friday and are on track to snap a two-week winning streak, despite settling higher in the previous session following a report that US President Donald Trump is not interested in returning to previous deal terms with Iran. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
Downstream tire makers are facing weaker new-order expectations, compounded by pressure from rising finished-goods inventories, resulting in softer operating rates, analysts from broker Guoxin Futures said in a note.
Semi-steel tire production utilisation eased slightly to 65.34percent as of August 27 from 65.74percent a week earlier, while all-steel tire utilisation edged up to 63.71percent from 62.79percent over the same period, data from rubber information provider Qinrex showed.
The front-month rubber contract on the Singapore Exchange’s SICOM platform for November delivery last traded at 235.2 US cents per kg, up 1percent as of 0703 GMT.