Japanese rubber futures extend declines

SINGAPORE: Japanese rubber futures extended declines on Thursday, weighed down by worries over the tenuous Middle East ceasefire, while inflation fears also dampened sentiment.

The Osaka Exchange (OSE) rubber contract for September delivery was down 0.9 yen, or 0.23percent, at 395.6 yen (USD2.49) per kg. The most-traded rubber contract on the Shanghai Futures Exchange (SHFE) is now the one for September delivery, instead of May.

It closed up 150 yuan, or 0.88percent, at 17,140 yuan (USD2,508.19) per metric ton. The most-active May butadiene rubber contract on the SHFE fell 190 yuan, or 1.11percent, to 16,900 yuan per ton. Asian markets sobered as the fragile Gulf ceasefire threatened to give way under Israel’s attacks on Lebanon.

Inflation concerns were also on the back of investor mind, with oil prices still around 40percent higher than pre-conflict levels. Figures on US core prices for February due later in the day are expected to show a chunky 0.4percent rise for a second month, and that was before the surge in energy costs, with a rate hike looking increasingly likely. Oil prices rose after tumbling below USD100 the day before, as doubts over the fragile two-week ceasefire raised concerns that energy flows through the crucial Strait of Hormuz will remain restricted.

Japan’s Nikkei retreated after a sharp rally in the previous session, snapping a four-session rally. China’s largest butadiene rubber producer, Sinopec Engineering, has been awarded a USD1.093 billion contract for the production of butadiene rubber in Kazakhstan. China produces up to 40percent of the world’s polybutadiene rubber, or around 2.2 million tons annually, according to consultancy ICIS. The front-month rubber contract on Singapore Exchange’s SICOM platform for May delivery last traded at 205.6 US cents per kg, down 0.4percent, as of 0704 GMT.