Japanese rubber futures fall amid stronger yen
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Japanese rubber futures fell for a fourth consecutive session on Thursday, pressured by a firmer yen, though rising oil prices helped limit the decline. The Osaka Exchange (OSE) August rubber contract dropped 0.28% to close at 360 yen ($2.41) per kg, while the May rubber contract on the Shanghai Futures Exchange (SHFE) edged up 0.37% to 17,685 yuan ($2,433.47) per metric ton.
The yen’s continued strength remains a key factor weighing on rubber prices. While the U.S. dollar rose slightly to 149.34 yen, it remains near its weakest level against the Japanese currency since early December 2024. A stronger yen makes yen-denominated assets more expensive for foreign buyers, dampening demand.
Meanwhile, oil prices climbed for the first time in three days, providing some support to rubber markets. U.S. President Donald Trump’s decision to revoke Chevron’s license to operate in Venezuela reignited supply concerns, boosting crude prices. Given that synthetic rubber is derived from crude oil, natural rubber prices often take cues from oil markets.
Despite the near-term pressure on rubber futures, supply-side factors are preventing a steeper decline. Natural rubber-producing regions are entering a seasonal low-production phase, tightening availability. Chinese consultancy Hexun Futures noted that while global trade uncertainties are weighing on rubber demand, supply constraints are acting as a stabilizing force.
Additionally, some rubber producers are showing reluctance to follow the downward trend in futures prices. Farah Miller, founder of Helixtap Technologies, pointed out that rising raw material costs have made producers hesitant to match lower futures pricing.
The Singapore Exchange's SICOM front-month rubber contract for March delivery reflected this sentiment, rising 1.5% to 205.3 U.S. cents per kg. While the yen's strength and trade uncertainties remain challenges, oil market developments and supply constraints could help limit further downside in the near term.
The yen’s continued strength remains a key factor weighing on rubber prices. While the U.S. dollar rose slightly to 149.34 yen, it remains near its weakest level against the Japanese currency since early December 2024. A stronger yen makes yen-denominated assets more expensive for foreign buyers, dampening demand.
Meanwhile, oil prices climbed for the first time in three days, providing some support to rubber markets. U.S. President Donald Trump’s decision to revoke Chevron’s license to operate in Venezuela reignited supply concerns, boosting crude prices. Given that synthetic rubber is derived from crude oil, natural rubber prices often take cues from oil markets.
Despite the near-term pressure on rubber futures, supply-side factors are preventing a steeper decline. Natural rubber-producing regions are entering a seasonal low-production phase, tightening availability. Chinese consultancy Hexun Futures noted that while global trade uncertainties are weighing on rubber demand, supply constraints are acting as a stabilizing force.
Additionally, some rubber producers are showing reluctance to follow the downward trend in futures prices. Farah Miller, founder of Helixtap Technologies, pointed out that rising raw material costs have made producers hesitant to match lower futures pricing.
The Singapore Exchange's SICOM front-month rubber contract for March delivery reflected this sentiment, rising 1.5% to 205.3 U.S. cents per kg. While the yen's strength and trade uncertainties remain challenges, oil market developments and supply constraints could help limit further downside in the near term.