Japanese Rubber Futures Rally

The Osaka Exchange (OSE) rubber contract for June delivery was up 4.2 yen, or 1.19percent, at 357.3 yen (USD2.25) per kg. The contract rose 1.48percent this week, logging a seventh consecutive weekly gain. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 520 yuan, or 3.29 percent, to 16,315 yuan (USD2,343.20) per metric ton.

The most-active March butadiene rubber contract on the SHFE gained 845 yuan, or 6.99percent, to 12,930 yuan per ton, close to the daily fluctuation limit of 7percent. The contract has gained 5.96percent week-on-week.

Oil prices rebounded on Friday after US President Donald Trump renewed threats against major Middle Eastern producer Iran, raising concerns of military action 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. Butadiene prices rebounded on tight spot supply and auction premiums, which lifted production costs for butadiene rubber factories, while robust downstream demand tightened feedstocks further, according to a report by Guoyan Futures Research.

Meanwhile, weather woes in top producers Thailand and Indonesia have tightened natural rubber supply, which lifted prices and improved sentiment for synthetic rubber, the report said. Coupled with an overall positive sentiment for commodities, butadiene rubber prices saw a persistent increase this week, it said.

The front-month rubber contract on Singapore Exchange’s SICOM platform for February delivery last traded at 185.80 US cents per kg, up 2.3percent as of 0700 GMT.