Japanese rubber lower on easing supply risks

The Osaka Exchange (OSE) rubber contract for May delivery was down 2 yen, or 0.6 percent, at 331.3 yen (USD2.13) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for May delivery rose 45 yuan, or 0.29 percent, to 15,320 yuan (USD2,175.92) per metric ton.

The most active February butadiene rubber contract on the SHFE lost 5 yuan, or 0.05 percent, to 11,040 yuan per metric ton. The weather in overseas production areas has improved, while demand support is limited, said Chinese broker Everbright Futures.According to top rubber producer Thailand’s meteorological agency, the northeast monsoon is set to weaken, bringing reduced rainfall in the south from December 17-23.

Rubber production is concentrated in the south of Thailand. The yen slid 0.1percent to 155.87, as the Bank of Japan starts a two-day meeting that is expected to result in a hike in policy rates to a three-decade high. A weaker currency makes yen-denominated assets more affordable to overseas buyers.

Oil prices rose after reports that the US was preparing new sanctions on Russian oil if Moscow does not agree to a Ukraine peace deal, while investors assessed supply risks from a blockade on tankers entering and leaving Venezuela.

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 January delivery last traded at 175.1 US cents per kg, down 0.5 percent.