Japanese rubber futures slip on rising supply prospects, weak demand

SHANGHAI: Japanese rubber futures declined for a second consecutive session on expectations of rising rubber supply from top producers, while weak downstream demand also weighed on prices.

The Osaka Exchange (OSE) rubber contract for October delivery closed down 2.8 yen, or 0.68percent, at 406.3 yen (USD2.55) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery dropped 180 yuan, or 1.03percent, to 17,345 yuan (USD2,548.56) per metric ton.

The most active June butadiene rubber contract on the SHFE fell 580 yuan, or 3.73percent, to 14,975 yuan per metric ton. Rubber supply is set to improve, with heavy rainfall in Thailand easing and the Ivory Coast about to enter its peak harvesting season next week, analysts say.

Rubber crops usually undergo a low-production season from February to May, before entering a peak harvesting period lasting until September.

In addition, operating rates at tyre companies may decline, as persistently high rubber costs have squeezed margins, and the lack of tyre demand from the Middle East has further weakened overall rubber demand, a report from Chinese broker Guoxin Futures said.

Oil prices gained more than 1percent on Thursday, paring previous losses as investors monitored peace talks between the United States and Iran, while supply tightness and US inventory drawdowns provided some support.

The front-month rubber contract on Singapore Exchange’s SICOM platform for June delivery last traded at 220.1 US cents per kg, down 0.9percent as of 0700 GMT.