Japanese rubber futures hit one-year low on supply outlook
SINGAPORE: Japanese rubber futures slid on Tuesday to their lowest in more than a year, pressured by weak demand for the tyre-making material in top consumer China and expectations of increased supply due to seasonal tapping.
The Osaka Exchange (OSE) rubber contract for November delivery ended daytime trade 3.9 yen lower, or 1.34%, at 287 yen ($2.01) per kg. Earlier in the session, prices hit 280 yen, their lowest point since February 13, 2024. The slide has been exacerbated by weaker-than-usual demand from tyre manufacturers, coupled with expectations that seasonal raw material output in June will meet or exceed forecasts, a Singapore-based trader.
'As a result, the market anticipates a supply surplus, prompting futures traders to sell in advance,' the trader added. Rubber crops usually undergo a season of low production from February to May, before a peak harvesting period that lasts until September.
Meanwhile, the price war in automotive industries has squeezed profits, while downstream demand from semi-steel tyre enterprises has weakened, said broker Everbright Futures. In China, an intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres.
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