TOKYO: Japanese rubber futures rose on Monday after six consecutive sessions of losses, supported by a rally in oil prices and concerns that heavy rain in top producer Thailand could disrupt latex harvesting.
The Osaka Exchange (OSE) rubber contract for February delivery was up 8.6 yen, or 2.01 percent, at 436.6 yen (USD2.80) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 410 yuan, or 2.18 percent, to 19,180 yuan (USD2,858.16) per metric ton.
The most-active October butadiene rubber contract on the SHFE surged 685 yuan, or 4.59 percent, to 15,605 yuan per ton. It touched its highest since May 18 earlier in the day.
Oil prices rose more than USD1 a barrel as tit-for-tat strikes between the US and Iran on vessels sailing in the Strait of Hormuz and other areas heightened concerns of a prolonged supply disruption 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 narrowing price gap between synthetic and natural rubber has prompted some downstream companies to raise the share of natural rubber in their formulations, creating additional marginal demand, analysts from broker Guoyuan Futures said in a note.
Top rubber producer Thailand’s meteorological agency warned of severe rains and flash floods from September 6 to 12.
Persistent rainfall continues to disrupt tapping in Thailand’s main producing areas, tightening raw material supply, the analysts said.
El Niño, which is expected to peak from September to November, raises the risk of further production cuts, they said.
The front-month rubber contract on Singapore Exchange’s SICOM platform for November delivery last traded at 240.5 US cents per kg, up 3 percent, as of 0707 GMT.