Japan rubber futures slip as raw material supply set to ease

TOKYO: Japanese rubber futures eased on Wednesday, pressured by expectations that raw material supply in top producer Thailand will loosen as the peak production season advances and by persistently weak tyre demand in top consumer China. Higher oil prices limited the size of losses.

The Osaka Exchange (OSE) rubber contract for March delivery was down 7.1 yen, or 1.54 percent, at 453.4 yen (USD2.87) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery slumped 450 yuan, or 2.19 percent, to 20,065 yuan (USD2,998.31) per metric ton.

The most active November butadiene rubber contract on the SHFE fell 300 yuan, or 1.85 percent, to 15,905 yuan per metric ton.

Heavy rain in Thailand has eased since mid-to late October, ahead of the region’s peak production season in the fourth quarter, pointing to a sequential rise in supply, analysts from broker Everbright Futures said in a note.

Tyre factory restocking has been slow following a local holiday and persistently high raw material costs, limiting demand, said the Everbright analysts.

Thai raw material prices are expected to ease in October as the region enters its seasonal production upswing, barring further weather disruption, analysts from broker GF Futures said in a note.

Oil prices climbed on Wednesday after two vessels were struck in the Strait of Hormuz and Iranian officials told Reuters they were deploying new tactics to target ships, as Tehran seeks to keep oil prices high and influence the US midterm elections

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 January delivery last traded at 254.5 US cents per kg, down 0.4 percent as of 0700 GMT.