Japanese rubber futures hit 7-month low amid yen, China concerns
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Japanese rubber futures dropped significantly on Tuesday, reaching their lowest levels in seven months, pressured by a strengthening yen and escalating deflation concerns in China, the world's leading rubber consumer. The benchmark Osaka Exchange August rubber contract declined by 2.36%, settling at 335 yen ($2.28) per kilogram after earlier dipping to 325.3 yen—the lowest point since August 2024.
Shanghai Futures Exchange (SHFE) rubber prices also weakened, with the May contract falling 0.26% to 17,145 yuan ($2,366.88) per metric ton, although the April butadiene rubber contract bucked the trend, rising 1.26% to 13,700 yuan ($1,891.30) per ton. Analysts cited profit-taking activities and market uncertainty stemming from various tariff policies as primary factors influencing trading dynamics.
Currency movements further influenced the market as the yen strengthened significantly, peaking at a five-month high against the U.S. dollar before stabilizing around 147.24. This appreciation made yen-denominated commodities more expensive for international buyers, reducing their attractiveness and contributing to the downward pressure on futures prices.
Compounding these challenges, recent economic data from China revealed ongoing deflationary pressures, with the Consumer Price Index in February showing the sharpest decline in 13 months. Despite modest growth in Chinese automobile sales—up 1.3% year-on-year in early 2025—and a rebound in Indonesia's automotive market driven by increasing adoption of electric vehicles, overall physical rubber demand remained subdued. Producers appear cautious, awaiting further clarity on raw material price movements before adjusting their market offerings.
Traders should closely track currency fluctuations, tariff developments, and macroeconomic indicators from China, given their substantial impact on rubber futures and broader commodity markets.
Shanghai Futures Exchange (SHFE) rubber prices also weakened, with the May contract falling 0.26% to 17,145 yuan ($2,366.88) per metric ton, although the April butadiene rubber contract bucked the trend, rising 1.26% to 13,700 yuan ($1,891.30) per ton. Analysts cited profit-taking activities and market uncertainty stemming from various tariff policies as primary factors influencing trading dynamics.
Currency movements further influenced the market as the yen strengthened significantly, peaking at a five-month high against the U.S. dollar before stabilizing around 147.24. This appreciation made yen-denominated commodities more expensive for international buyers, reducing their attractiveness and contributing to the downward pressure on futures prices.
Compounding these challenges, recent economic data from China revealed ongoing deflationary pressures, with the Consumer Price Index in February showing the sharpest decline in 13 months. Despite modest growth in Chinese automobile sales—up 1.3% year-on-year in early 2025—and a rebound in Indonesia's automotive market driven by increasing adoption of electric vehicles, overall physical rubber demand remained subdued. Producers appear cautious, awaiting further clarity on raw material price movements before adjusting their market offerings.
Traders should closely track currency fluctuations, tariff developments, and macroeconomic indicators from China, given their substantial impact on rubber futures and broader commodity markets.