Japan rubber futures rise on butadiene rally, supply concerns

TOKYO: Japanese rubber futures rose on Wednesday, lifted by a rally in butadiene rubber prices and rain-related tapping disruptions in top producer Thailand.

The Osaka Exchange (OSE) rubber contract for January delivery was up 7.6 yen, or 1.78 percent, at 435.4 yen (USD2.73) per kg.

The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 220 yuan, or 1.22 percent, to 18,215 yuan (USD2,703.69) per metric ton.

The most active October butadiene rubber contract on the SHFE gained 350 yuan, or 2.44 percent, to 14,680 yuan per metric ton, extending its winning streak to a seventh straight session.

The strength in butadiene rubber, a type of synthetic rubber, is driving up prices for natural rubber, said analysts from Chinese broker GF Futures in a note.

Oil prices climbed for a fourth straight day on Wednesday as investors weighed conflicting messages from Tehran and Washington on whether the Strait of Hormuz is open to ships.

Butadiene rubber tracks crude oil as a key feedstock, and its recent strength has added support for natural rubber, which competes with synthetic rubber made from crude oil.

Top rubber producer Thailand’s meteorological agency warned of severe rains and flash floods from August 18-21.

Thailand is currently in its rainy season, with intermittent rainfall disrupting rubber tapping operations, said analysts from Min metals Futures in a note. Raw material prices remain at relatively high levels, improving mill profitability and adding further support to rubber prices in the near term, the analysts added.

The prices of Thailand’s benchmark export-grade smoked rubber sheet (RSS3) and block rubber were down 0.79 percent and 0.22 percent, to stand at 91.65 baht per kg and 77.99 baht per kg, respectively.

The front-month rubber contract on Singapore Exchange’s SICOM platform for November delivery last traded at 225 US cents per kg, up 1 percent as of 0700 GMT.