Japanese rubber futures retreat in broad-based commodity sell-off

The Osaka Exchange (OSE) rubber contract for July delivery was down 2.8 yen, or 0.8percent, at 345.3 yen (USD2.21) per kg, as of 0159 GMT. The contract has gained 0.23percent so far this week.

The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery fell 135 yuan, or 0.83percent, to 16,080 yuan (USD2,317.20) per metric ton. The contract has lost 3.13percent this week. The most-active March butadiene rubber contract on the SHFE fell 90 yuan, or 0.7percent, to 12,770 yuan per ton.

Rubber prices fell along with other commodities, led by gold and silver, following a tech sell-off on Wall Street over fears about the artificial intelligence boom. Oil prices extended their decline on Friday, with US crude futures on track for their first weekly drop in weeks, as concerns of supply disruption in the Middle East eased with investors focusing on the outcome of US-Iran nuclear talks in Oman later in the day.

Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. A decline in tyre manufacturing in top consumer China ahead of the Lunar New Year holiday has stoked concerns over demand for feedstock.

The capacity utilisation rate of all-steel and semi-steel tyre manufacturers decreased more than 2percent week-on-week and 3percent month-on-month, according to Chinese financial information site Quheqihuo.

Consistently high rubber prices have also prompted tyre manufacturers to cut back on rubber procurement, according to a note from Zhongtai Futures.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 187.7 US cents per kg, down 0.2percent.