Japanese rubber futures drop on stronger yen and China’s deflation
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Japanese rubber futures continued their losing streak on Monday, with the Osaka Exchange (OSE) August contract (TRB1!) closing down 1.89% at 343.1 yen/kg, after touching its lowest level since November 14 at 341.3 yen. The ongoing decline marks the fifth consecutive session of losses, driven by a firmer yen (USDJPY -0.46%) and concerns over China’s deflationary pressures.
On the Shanghai Futures Exchange (SHFE), the May rubber contract (RSS31!) dropped 2.15% to 17,100 yuan/ton, while the April butadiene rubber contract shed 295 yuan (-2.15%) to 13,400 yuan/ton. The bearish sentiment reflects weak domestic demand in China, where consumer prices in February fell at their sharpest pace in 13 months, and producer price deflation persisted. Adding to the pressure, China’s imports unexpectedly contracted, while export momentum slowed amid growing U.S. tariff threats.
Meanwhile, the yen strengthened 0.25% to 147.68 per dollar, approaching a five-month high, as investors sought safe-haven assets. A stronger yen makes yen-denominated commodities more expensive for overseas buyers, further weighing on rubber futures.
Broader market sentiment also deteriorated as oil prices declined, pressured by concerns over U.S. tariffs, global growth risks, and increased OPEC+ production. Given that synthetic rubber is derived from crude oil, lower oil prices typically drag natural rubber demand lower as well.
In Singapore, the front-month SICOM rubber contract (TF1!) for March delivery last traded at 197.3 U.S. cents/kg, down 1.2%.
Looking ahead, weather disruptions in Thailand, the world's largest rubber producer, could introduce additional volatility. The Thai meteorological agency has warned of heavy rains and thundershowers from March 12-13, posing risks to rubber crop yields. Investors will be closely watching demand signals from China, alongside currency movements and oil price trends, to assess the next direction for rubber futures.
On the Shanghai Futures Exchange (SHFE), the May rubber contract (RSS31!) dropped 2.15% to 17,100 yuan/ton, while the April butadiene rubber contract shed 295 yuan (-2.15%) to 13,400 yuan/ton. The bearish sentiment reflects weak domestic demand in China, where consumer prices in February fell at their sharpest pace in 13 months, and producer price deflation persisted. Adding to the pressure, China’s imports unexpectedly contracted, while export momentum slowed amid growing U.S. tariff threats.
Meanwhile, the yen strengthened 0.25% to 147.68 per dollar, approaching a five-month high, as investors sought safe-haven assets. A stronger yen makes yen-denominated commodities more expensive for overseas buyers, further weighing on rubber futures.
Broader market sentiment also deteriorated as oil prices declined, pressured by concerns over U.S. tariffs, global growth risks, and increased OPEC+ production. Given that synthetic rubber is derived from crude oil, lower oil prices typically drag natural rubber demand lower as well.
In Singapore, the front-month SICOM rubber contract (TF1!) for March delivery last traded at 197.3 U.S. cents/kg, down 1.2%.
Looking ahead, weather disruptions in Thailand, the world's largest rubber producer, could introduce additional volatility. The Thai meteorological agency has warned of heavy rains and thundershowers from March 12-13, posing risks to rubber crop yields. Investors will be closely watching demand signals from China, alongside currency movements and oil price trends, to assess the next direction for rubber futures.