Japan rubber futures consolidate on falling oil prices

Japanese rubber futures fell for a second consecutive session on Wednesday, with rubber prices across the Osaka, Shanghai and Singapore exchanges falling from monthly highs on the back of declining oil prices.

The Osaka Exchange (OSE) rubber contract for August delivery was down 4.2 yen, or 1.12%, at 370.5 yen  ($2.33) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 430 yuan, or 2.55%, to 16,400 yuan ($2,385.63) per metric ton, declining to its lowest in a month.

The most active May butadiene rubber contract on the SHFE fell 240 yuan, or 1.55%, to 15,260 yuan per metric ton.

The prices of Thailand’s benchmark export-grade smoked rubber sheet (RSS3) and block rubber were up 0.48% and 0.97%, to stand at 83.3 baht per kg and 71.1 baht per kg, respectively.

Rubber prices saw a correction following the stabilization of Brent futures above $100 per barrel, several Chinese brokers noted.

Oil prices fell more than $2 per barrel on Wednesday to pare some of Tuesday’s sharp gains after the Iraqi government and Kurdish authorities reached a deal to resume oil exports via Turkey’s Ceyhan port, providing modest relief to concerns about supplies 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.

Demand for rubber has recovered, with overall rubber inventories decreasing, resulting in stable cost support, a note from Chinese broker Nanhua Futures said.

However, traders are cautious about rising downstream costs and tire exports, which might be impeded by the Iran war as the Strait of Hormuz remains shut, the note added.

The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 191.9 U.S. cents per kg, down 1.9% as of 0708 GMT.