Japan rubber futures extend gains tracking oil, focus on Mideast developments

Japanese rubber futures rose for a fifth straight session on Tuesday to a one-and-a-half-year high, tracking stronger oil prices, while focus was also on the developments in the Middle East as the deadline for a ceasefire deal approached.

The Osaka Exchange (OSE) rubber contract for September delivery was up 3 yen, or 0.76%, at 397.4 yen ($2.49) per kg.

It last rose above the 400 yen barrier on October 10, 2024.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 155 yuan, or 0.92%, to 16,925 yuan ($2,462.43) per metric ton.

The most-active May butadiene rubber contract on the SHFE gained 605 yuan, or 3.49%, to 17,940 yuan per ton.

Iran said on Monday it wanted a lasting end to the war with the U.S. and Israel, and pushed back against pressure to reopen the Strait of Hormuz, while U.S. President Donald Trump warned the country could be “taken out” if it did not meet his Tuesday night deadline to reach a deal.

Markets are pricing in the likelihood of the war ending, or at least some positive developments towards a ceasefire, which will calm inflation and growth fears and support sentiment and demand, a Singapore-based rubber trader told Reuters.

The Japanese yen last bought 159.74 per U.S. dollar, hovering near the crucial 160 level that traders have been watching out for to gauge whether Tokyo might intervene in the wake of strong recent comments from officials.

A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers.

Oil prices extended gains on Tuesday as a U.S.-imposed deadline loomed for Iran to open the Strait of Hormuz.

Natural rubber often tracks oil prices as it competes with synthetic rubber, which is made from crude oil.

The front-month rubber contract on Singapore Exchange’s SICOM platform for May delivery last traded at 204.6 U.S. cents per kg, up 0.6% as of 0700 GMT.