SINGAPORE: Japanese rubber futures rose on Monday on concerns over tapping disruptions from continued heavy rains in top producer Thailand, though falling oil prices capped gains.
The Osaka Exchange (OSE) rubber contract for March delivery was up 1.2 yen, or 0.27 percent, at 452.2 yen (USD2.87) per kg. Thailand’s meteorological agency warned of severe rains and flash floods from October 4-8.
Operations at Toyota’s Thai plants remain suspended until October 10 due to floods. Market sentiment remains bullish with the uptrend firmly intact, though prices could grow more volatile as liquidity declines during the closure of Chinese markets for the National Day holiday, Japan Exchange Group said in a report on Monday. Natural rubber benchmarks have risen sharply across major producing countries this year, with momentum accelerating in the third quarter, the International Rubber Study Group (IRSG) said in a report on Friday. Prices will depend on whether higher-priced incentives draw more tapping activity even as a sizeable buffer of untapped, mature rubber capacity remains, the IRSG said. In the longer term, ageing trees and insufficient replanting could narrow that buffer as vehicle and tyre demand continues to grow, the IRSG added.
Oil prices fell on Monday as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted supplies, offsetting concerns about further damage to Gulf oil infrastructure as the US-Israeli war on Iran drags on.
Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month rubber contract on Singapore Exchange’s SICOM platform for December delivery last traded at 258.8 US cents per kg, up 0.7 percent as of 0700 GMT.