Japanese rubber futures trade in tight range amid tightening supply

SHANGHAI: Japanese rubber futures traded in a narrow range on Monday, as investors weighed pressure from easing oil prices against support from signs of tighter supply.

The Osaka Exchange (OSE) rubber contract for January delivery was up 0.9 yen, or 0.21 percent, at 439.9 yen (USD2.77) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for January delivery rose 115 yuan, or 0.62 percent, to 18,610 yuan (USD2,768.52) per metric ton.

The most-active October butadiene rubber contract on the SHFE gained 160 yuan, or 1.1percent, to 14,720 yuan per ton. Oil prices slipped more than USD1 a barrel on Monday as investors took profits ahead of an expected announcement from Washington about imposing more sanctions on Iran that may further disrupt supplies from the Middle East. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange fell 3.3 percent from last Friday, the exchange said on Friday. Top rubber producer Thailand’s meteorological agency warned of severe rains and flash floods from August 27-29.

Excessive rainfall across major producing regions has curbed tapping and raw material output, with Thailand’s north and northeast particularly affected, Di Yilin, analyst at Chinese broker Everbright Futures, said in a note.

Prices of Thailand’s benchmark export-grade smoked rubber sheet (RSS3) and block rubber were up 0.35percent and 1.05percent at 92.57 baht per kg and 80.1 baht per kg, respectively.

The front-month rubber contract on Singapore Exchange’s SICOM platform for November delivery last traded at 231.4 US cents per kg, up 0.9percent as of 0705 GMT.