SHANGHAI: Japanese rubber futures eased on Thursday to its lowest in two weeks, pressured by lower oil prices, while a firmer yen added to the downside.
The Osaka Exchange (OSE) rubber contract for February delivery was down 3.5 yen, or 0.81percent, at 428.7 yen (USD2.73) per kg. The contract touched its lowest since August 19 earlier in the day. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery lost 20 yuan, or 0.11percent, to 18,640 yuan (USD2,774.72) per metric ton.
The most active October butadiene rubber contract on the SHFE shed 285 yuan, or 1.9percent, to 14,745 yuan per metric ton. The yen extended gains on Thursday after a sudden burst higher in the previous session, though traders stopped short of attributing the move to Japanese authorities and instead pointed to a hawkish repricing of domestic rate expectations.
A stronger currency makes yen-denominated assets less affordable to overseas buyers. Oil prices edged lower on Thursday as investors weighed the uncertainty of renewed military strikes between the US and Iran that risk disrupting supplies from the Middle East. * Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
The recent pullback reflects a correction of the weather-driven sentiment premium built up in the rally rather than a deterioration in fundamentals, with downstream demand unlikely to weaken substantially, said analysts from broker Tianfeng Futures in a note. Natural rubber’s failure to break above previous highs suggests the market may continue trading within a range for now, analysts from broker Gelin Dahua Futures said in a note.
The front-month rubber contract on Singapore Exchange’s SICOM platform for November delivery last traded at 232.1 US cents per kg, up 0.1percent as of 0700 GMT.