Japanese rubber futures pare early gains

SHANGHAI: Japanese rubber futures pared earlier gains and snapped a two-day winning streak on the back of slowing demand as China completes destocking ahead of the May Day holiday and accumulating inventories at China’s rubber import hub of Qingdao weigh on prices. The Osaka Exchange (OSE) rubber contract for October delivery was down 0.7 yen, or 0.18percent, at 399 yen (USD2.50) per kg.

Still, the contract gained 2.97percent this week. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery lost 335 yuan, or 1.93percent, to 17,060 yuan (USD2,494.99) per metric ton. The most-active June butadiene rubber contract on the SHFE gained 135 yuan, or 0.87percent, to 15,700 yuan per ton.

Chinese factories have largely completed restocking prior to the five-day May Day holiday, a Singapore-based rubber trader said.

Thus, demand for rubber will remain weak ahead of the holiday, which falls on May 1-5.

Both bonded and warehouse inventory at China’s rubber import hub of Qingdao have also increased, according to data from the Qingdao International Rubber Exchange Market, pressuring prices lower.

Japan’s core inflation slowed below the central bank’s 2percent target for a second straight month in March, data showed on Friday, as government fuel subsidies and moderating food inflation offset price pressures from the Iran war-induced energy shock.

Trading volumes in rubber were relatively muted on Friday ahead of the weekend, exacerbating price movements, according to LSEG-compiled data.

The front-month rubber contract on Singapore Exchange’s SICOM platform for May delivery last traded at 210 US cents per kg, down 0.1percent as of 0700 GMT.