Japanese rubber futures dip on firmer yen, soft auto demand

SINGAPORE: Japanese rubber futures fell on Monday, pressured by a stronger yen and soft demand from the automobile sector, although losses were limited by heavy rainfall across several key ASEAN-producing regions.

The Osaka Exchange (OSE) rubber contract for May delivery was down 6.1 yen, or 1.78 percent, at 336.8 yen (USD2.17) per kg, as of 0225 GMT. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery dipped 245 yuan, or 1.59 percent, to 15,170 yuan (USD2,144.35) per metric ton.

The most-active January butadiene rubber contract on the SHFE fell 175 yuan, or 1.68percent, to 10,240 yuan per ton. The yen extended gains on data showing Japanese corporate spending on factories and equipment rose, a sign that the world’s fourth-largest economy is weathering the impact of US tariffs well.

A stronger Japanese currency makes yen-denominated assets less affordable to overseas buyers. “Prices were initially supported by heavy rainfall and flooding across several ASEAN-producing countries, but gains were capped by concerns over weakening demand and intensifying competition in China’s vehicle market,” Japan Exchange Group said in a report.

Japan’s manufacturing activity shrank for the fifth consecutive month in November, amid weaker demand across the automotive and semiconductor industries. Oil prices rose over 1.5 percent on Monday after the OPEC+ meeting on Sunday reaffirmed its plan to pause production increases in the first quarter of next year.

Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Top rubber producer Thailand’s meteorological agency warned of thundershowers and accumulated rains from December 3-6. The front-month rubber contract on Singapore Exchange’s SICOM platform for January delivery last traded at 171.4 US cents per kg, down 0.8 percent.

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