Japan rubber futures rise on China summit
SINGAPORE: Japanese rubber futures ended the day higher on Monday, buoyed by bullish sentiment from the Shanghai Cooperation Organisation (SCO) summit and arbitrage activity by Chinese traders.
The Osaka Exchange (OSE) rubber contract for February delivery adds 0.2 yen, or 0.06 percent, at 324.3 yen (USD2.19) per kg.
The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 140 yuan, or 0.87 percent, to 16,260 yuan (USD2,279.77) per metric ton.
The most active October butadiene rubber contract on the SHFE gained 65 yuan, or 0.54 percent, to 12,030 yuan per ton.
Despite sharp gains in futures, activity in most international markets remained subdued, said Farah Miller, founder of independent rubber-focused firm Helixtap Technologies.
Most trading was concentrated among CFR China cargoes and Chinese traders, who were likely engaging in arbitrage trades between the strong futures market and weaker physical prices, Miller added.
Bullish momentum in rubber markets last week was supported by the SCO summit, where China gained backing from more than 20 world leaders, Japan Exchange Group said in a report on Monday.
Top rubber producer Thailand’s meteorological agency warned of heavy rains and accumulations that may cause flash floods and overflows from September 8-11.
Broadly, the yen slumped 0.5 percent against the dollar to 148.16 following news that Japanese Prime Minister Shigeru Ishiba had resigned.
A weaker currency makes yen-denominated assets more affordable to overseas buyers.
Oil prices climbed on the prospects of more sanctions on Russian crude.
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 September delivery last traded at 178.1 US cents per kg, down 0.3 percent.
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