Japanese rubber futures decline amid yen strength and tariff concerns
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Japanese rubber futures came under pressure on Tuesday, reflecting a confluence of macroeconomic and geopolitical factors. The Osaka Exchange (OSE) September rubber contract (TRB1!) dropped 1.22% to 299.4 yen/kg ($2.09) during the daytime session, driven by appreciation in the Japanese yen and persistent uncertainty over U.S. auto tariffs, which continue to weigh on the broader sentiment in commodities linked to industrial production.
The stronger yen, trading at 142.99 per dollar, near its six-month peak of 142.05, is reducing the competitiveness of yen-denominated exports, including rubber, by making them more expensive for foreign buyers. This currency strength has dampened overseas demand expectations, especially as the market remains sensitive to back-and-forth trade policy statements from the U.S. administration.
In China, the Shanghai Futures Exchange (SHFE) followed suit, with the May RSS3 contract (RSS31!) declining 2.36% to 14,710 yuan/ton ($2,012.31) and May butadiene rubber futures falling 2.69% to 11,410 yuan/ton ($1,560.88). These declines mirror weakening demand expectations tied to recessionary concerns and regional supply dynamics.
The market remains cautious following reports that Nissan (7201) plans to cut domestic production of its top-selling U.S. model — a strategic response to evolving U.S. trade policies targeting imported autos and parts. Any contraction in automotive output, especially for export-oriented models, directly impacts demand for synthetic and natural rubber, particularly in tire manufacturing.
Meanwhile, President Trump’s comments hinting at potential modifications to the current 25% tariff on autos imported from Mexico, Canada, and elsewhere have done little to provide clarity, leaving producers and traders on edge. The lack of consistency in tariff communication continues to disrupt forward-looking production and procurement planning across sectors reliant on global supply chains.
On the Singapore Exchange (SICOM), front-month May rubber contracts (TF1!) last traded at 166.2 U.S. cents/kg, down 2.1%, extending losses in line with regional benchmarks.
Adding to the pressure is the seasonal rebound in raw material availability. Rubber typically enters a low-production phase from February to May, followed by increased supply through September, limiting the scope for a meaningful rally in prices in the absence of demand-side support.
In conclusion, rubber markets remain vulnerable to a combination of FX headwinds, tariff-induced industrial uncertainty, and seasonal supply factors, with limited upside potential in the near term unless macro clarity returns or automotive demand surprises to the upside.
The stronger yen, trading at 142.99 per dollar, near its six-month peak of 142.05, is reducing the competitiveness of yen-denominated exports, including rubber, by making them more expensive for foreign buyers. This currency strength has dampened overseas demand expectations, especially as the market remains sensitive to back-and-forth trade policy statements from the U.S. administration.
In China, the Shanghai Futures Exchange (SHFE) followed suit, with the May RSS3 contract (RSS31!) declining 2.36% to 14,710 yuan/ton ($2,012.31) and May butadiene rubber futures falling 2.69% to 11,410 yuan/ton ($1,560.88). These declines mirror weakening demand expectations tied to recessionary concerns and regional supply dynamics.
The market remains cautious following reports that Nissan (7201) plans to cut domestic production of its top-selling U.S. model — a strategic response to evolving U.S. trade policies targeting imported autos and parts. Any contraction in automotive output, especially for export-oriented models, directly impacts demand for synthetic and natural rubber, particularly in tire manufacturing.
Meanwhile, President Trump’s comments hinting at potential modifications to the current 25% tariff on autos imported from Mexico, Canada, and elsewhere have done little to provide clarity, leaving producers and traders on edge. The lack of consistency in tariff communication continues to disrupt forward-looking production and procurement planning across sectors reliant on global supply chains.
On the Singapore Exchange (SICOM), front-month May rubber contracts (TF1!) last traded at 166.2 U.S. cents/kg, down 2.1%, extending losses in line with regional benchmarks.
Adding to the pressure is the seasonal rebound in raw material availability. Rubber typically enters a low-production phase from February to May, followed by increased supply through September, limiting the scope for a meaningful rally in prices in the absence of demand-side support.
In conclusion, rubber markets remain vulnerable to a combination of FX headwinds, tariff-induced industrial uncertainty, and seasonal supply factors, with limited upside potential in the near term unless macro clarity returns or automotive demand surprises to the upside.