Japan rubber futures up on eased sino-US tension, supply caps gains
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Japanese rubber futures showed strength on Thursday, benefiting from investor optimism regarding potential easing of trade tensions between the US and China. This sentiment was underpinned by recent statements from US Treasury Secretary Scott Bessent, who emphasized the unsustainability of high tariffs and indicated a willingness from the Trump administration to de-escalate the trade war. Despite this supportive backdrop, further gains were tempered by expectations of increased rubber supply.
On the Osaka Exchange, the October delivery rubber contract closed daytime trading up 1.33%, rising by 3.8 yen to 290 yen ($2.03) per kilogram. Concurrently, the Shanghai Futures Exchange's rubber contract for September delivery increased by 1.17% to 14,735 yuan ($2,020.02) per metric ton, while the May butadiene rubber contract gained 1.49%, reaching 11,235 yuan ($1,540.20) per metric ton.
Nonetheless, traders remain cautious, pointing out that sustained market improvement is unlikely without concrete trade negotiations or stronger economic stimulus from China. Current global sentiment, coupled with cautious purchasing behavior and seasonal production expectations, continues to weigh on rubber market dynamics. Indeed, domestic production areas in China have begun trial harvesting, and major rubber-producing regions in Southeast Asia are poised to enter their peak harvesting season in May, further increasing market supply pressures.
Currency movements provided additional context to market dynamics, as the dollar rebounded from significant support levels, trading at 142.75 yen. A weaker yen generally makes yen-denominated commodities like Japanese rubber more attractive to international buyers, providing some underlying support for futures prices.
The front-month May delivery rubber contract on the Singapore Exchange’s SICOM platform, however, declined slightly by 0.8%, trading at 167.4 cents per kilogram.
In conclusion, traders should closely monitor developments in US-China trade relations and signs of Chinese economic stimulus, as these factors are likely to determine short-term market direction. Additionally, forthcoming increases in rubber supply during the harvesting season will likely act as a natural cap on price gains, keeping markets cautious in the near term.
On the Osaka Exchange, the October delivery rubber contract closed daytime trading up 1.33%, rising by 3.8 yen to 290 yen ($2.03) per kilogram. Concurrently, the Shanghai Futures Exchange's rubber contract for September delivery increased by 1.17% to 14,735 yuan ($2,020.02) per metric ton, while the May butadiene rubber contract gained 1.49%, reaching 11,235 yuan ($1,540.20) per metric ton.
Nonetheless, traders remain cautious, pointing out that sustained market improvement is unlikely without concrete trade negotiations or stronger economic stimulus from China. Current global sentiment, coupled with cautious purchasing behavior and seasonal production expectations, continues to weigh on rubber market dynamics. Indeed, domestic production areas in China have begun trial harvesting, and major rubber-producing regions in Southeast Asia are poised to enter their peak harvesting season in May, further increasing market supply pressures.
Currency movements provided additional context to market dynamics, as the dollar rebounded from significant support levels, trading at 142.75 yen. A weaker yen generally makes yen-denominated commodities like Japanese rubber more attractive to international buyers, providing some underlying support for futures prices.
The front-month May delivery rubber contract on the Singapore Exchange’s SICOM platform, however, declined slightly by 0.8%, trading at 167.4 cents per kilogram.
In conclusion, traders should closely monitor developments in US-China trade relations and signs of Chinese economic stimulus, as these factors are likely to determine short-term market direction. Additionally, forthcoming increases in rubber supply during the harvesting season will likely act as a natural cap on price gains, keeping markets cautious in the near term.