Japanese rubber futures rally

SINGAPORE: Japanese rubber futures rose for a ninth consecutive session on Wednesday, underpinned by supply concerns due to weather risks in southern Thailand, one of the world’s largest producers.

The Osaka Exchange (OSE) rubber contract for April delivery was up 5.2 yen, or 1.59 percent, at 331.8 yen (USD2.14) per kg, as of 0245 GMT. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 110 yuan, or 0.72 percent, to 15,430 yuan (USD2,170.79) per metric ton. The most active January butadiene rubber contract on the SHFE gained 85 yuan, or 0.81percent, to 10,630 yuan per metric ton. Thailand’s meteorological agency warned of heavy rains and accumulations that may cause flash floods and overflows in the south from November 19-22. Rubber production is concentrated in the south of Thailand.

With butadiene operating rates rising and domestic supply increasing, prices fell and butadiene rubber processing margins rebounded to their highest level this year, said analysts from Chinese broker BOC Futures Research. The yen advanced 0.1 percent to 155.49, after hitting a nine-month low against the dollar on Tuesday.

A stronger currency makes yen-denominated assets less affordable to overseas buyers. Japan’s Nikkei gained 0.4 percent in early trade, after logging its biggest drop in over seven months in the previous session on concerns over the valuations of technology-related companies.

Oil prices dipped as increasing crude and fuel inventories in top consumer US reinforced concerns of supply exceeding demand in the market.

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 December delivery last traded at 173.6 US cents per kg, up 0.6 percent.

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