Japan rubber futures edge higher

SINGAPORE: Japanese rubber futures reversed earlier losses on Wednesday, helped by soaring oil prices and freight rates as the US-Israeli war on Iran disrupted Middle East supplies.

The Osaka Exchange (OSE) rubber contract for August delivery was up 1.7 yen, or 0.46 percent, at 373.4 yen (USD2.37) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 410 yuan, or 2.39 percent, to 16,740 yuan (USD2,420.44) per metric ton.

The most active April butadiene rubber contract on the SHFE gained 265 yuan, or 1.95 percent, to 13,825 yuan per metric ton.

Oil prices rose 1 percent as the US-Israeli war on Iran disrupted Middle East supplies, but the pace of gains slowed from past sessions after President Donald Trump raised the possibility of the US Navy escorting vessels through the Strait of Hormuz.

Natural rubber follows oil prices as crude oil-derived synthetic rubber competes for market share, though rising freight rates will deter buyers from purchasing cargoes.

Natural rubber likely underwent a correction earlier this session amid global uncertainty, a Singapore-based rubber trader told Reuters.

Rubber prices previously rallied to one-year highs in recent sessions amid supply shortages as rubber trees undergo wintering in top-producing countries such as Thailand and Vietnam.

Traders likely booked profits amid soaring freight rates, taking cues from Asian stock markets.

Asian markets tanked on Wednesday as investors dumped crowded bets on chipmakers on worries a widening Middle East war will drive an oil shock that raises inflation and delays rate cuts. Japan’s Nikkei fell 3.9 percent.

Both long and short positions have exited the Chinese natural rubber market, with more long positions exiting than short positions, indicating a bearish outlook, a note on the Chinese financial information portal queheqihuo said.