TOKYO: Japanese rubber futures edged higher on Thursday, as tight supply outweighed the impact of a steep slide in oil prices.
The Osaka Exchange (OSE) rubber contract for April delivery was up 2.1 yen, or 0.49 percent, at 433.3 yen (USD2.75) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery was little changed at 18,945 yuan (USD2,840.63) per metric ton, following a correction that has taken it more than 10 percent below its October 12 intraday high in less than a month.
The most active December butadiene rubber contract on the SHFE slumped 910 yuan, or 5.54 percent, to 15,525 yuan per metric ton.
Weak macroeconomic conditions and capital outflows have gradually squeezed out the weather and warehouse receipt premiums that previously lifted prices, analysts from broker Zijin Tianfeng Futures said in a note.
Data still point to continued production cuts and tight supply, while purchasing for immediate needs and restocking on dips are limiting the downside, they said.
Top rubber producer Thailand’s meteorological agency warned of severe rains and flash floods in the South from November 6-9, which could affect tapping operations in key producing areas.
Oil prices fell for a fourth day on Thursday on expectations the losses US President Donald Trump’s Republican Party suffered in Congressional elections this week may reduce the risk of further escalation of the US-Israeli war on Iran.
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 242.1 US cents per kg, up 0.2 percent as of 0700 GMT.