Japanese rubber futures gain on surging oil prices

The Osaka Exchange (OSE) rubber contract for August delivery closed 0.7 yen, or 0.19percent, higher at 376.2 yen (USD2.40) per kg. Prices had gained 9percent last month. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 810 yuan, or 6.4percent, to 17,245 yuan (USD2,505.19) per metric ton.

The most-active April butadiene rubber contract on the SHFE rose 105 yuan, or 0.83 percent, to 13,465 yuan per ton. Oil prices surged by as much as 13percent after shipping in the crucial Strait of Hormuz was disrupted by retaliatory Iranian attacks following initial bombing by Israel and the US that killed Iranian Supreme Leader Ali Khamenei.

Natural rubber often follows oil prices as it competes for market share with synthetic rubber, which is made from crude oil. Rising concerns over potential rubber supply shortages drove the rally as wintering begins in producing countries in the Northern Hemisphere such as Thailand and Vietnam, triggering strong speculative buying by commodity funds, the Japan Exchange Group said in a weekly report on Monday. Firm end-user demand and an escalating conflict in the Middle East also encouraged long positioning, the report said. Japanese rubber prices rose 5.4percent last week.

The market struggled for momentum in early trade on Monday as high rubber prices led to weak buying interest from tyre manufacturers, Chinese petrochemical and bulk commodity information platform Longzhong Information said.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.3percent from February 13, the exchange said on February 27.

The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 203.2 US cents per kg, up 1.2percent, as of 0700 GMT.