SHANGHAI: Japanese rubber futures edged higher on Thursday, as oil prices rallied and rubber production showed signs of falling short of expectations in major producing areas.
The Osaka Exchange (OSE) rubber contract for March delivery was up 3.2 yen, or 0.71 percent, at 452 yen (USD2.88) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery lost 105 yuan, or 0.53 percent, to 19,530 yuan (USD2,926.24) per metric ton. The most-active December butadiene rubber contract on the SHFE gained 125 yuan, or 0.8 percent, to 15,730 yuan per ton.
Oil prices rallied over USD2 a barrel on Thursday after more Houthi attacks on Saudi Arabia stoked concerns over a broader escalation of conflict and further disruptions to crude supplies from the world’s key exporting region Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.
Rubber production in major Southeast Asian producing areas has fallen short of expectations, analysts from broker Everbright.
Futures said in a note. In southern Thailand, the output is limited due to the ageing of rubber trees, said analysts from Zijin Tianfeng Futures in a note.
Chinese tyre factories have resumed operations after a holiday, but with activity still in the early stages, overall output remains low and restocking slow, limiting the upside, Everbright Futures analysts added.
China’s rubber tyre output totalled 100.85 million units in September, down 3.3 percent year-on-year, data from the National Bureau of Statistics showed.
The front-month rubber contract on Singapore Exchange’s SICOM platform for January delivery last traded at 249 US cents per kg, down 0.8 percent as of 0700 GMT.