Japanese rubber futures lose ground on profit-booking

The Osaka Exchange (OSE) rubber contract for July delivery was down 7.1 yen, or 2.02percent, at 344.5 yen (USD2.24) per kg. The contract has fallen 3.58 percent this week after six straight weeks of gains. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 230 yuan, or 1.39 percent, to 16,355 yuan (USD2,353.75) per metric ton.

The most-active March butadiene rubber contract on the SHFE rose 1.29 percent to 13,390 yuan per ton. “The recent rally in rubber appears to be driven largely by speculative flows across commodities, particularly metals,” a trader told Reuters.

After a strong run-up in January, traders are likely to book profits ahead of the weekend, the trader said. In addition, most pre-Lunar New Year stocking would have been complete with just 12 trading days left, the trader said, highlighting limited upside potential.

Fundamentally, demand hasn’t changed drastically, so the sharp drop in prices could mean that traders don’t see prices going much higher, said Farah Miller, CEO of rubber-centric data company Helixtax Technologies.

Oil prices slipped more than 1percent on Friday from multi-month highs, though they are set for their most substantial gains in years, as the risk premium surged due to a potential US attack on Iran that could disrupt supplies.

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 February delivery last traded at 195 US cents per kg, up 1.9percent, as of 0700 GMT.