Key Takeaways
- Japanese rubber futures increased due to higher oil prices and robust physical demand.
- The Osaka Exchange rubber contract for December delivery rose 0.29%.
- Chinese tyre exports grew by 4.8% year-on-year in June.
Japanese rubber futures saw a rise on Monday, driven by higher oil prices and strong physical demand, according to market reports. The Osaka Exchange (OSE) rubber contract for December delivery increased by 1.2 yen, or 0.29%, to 421 yen ($2.60) per kg.
The Shanghai Futures Exchange (SHFE) also saw a rise in its rubber contracts; the September delivery rose 105 yuan, or 0.62%, to 16,910 yuan ($2,493.07) per metric ton. The most-active September butadiene rubber contract surged by 490 yuan, or 3.92%, to 12,990 yuan per ton.
Oil prices experienced a significant increase of over 4% due to ongoing threats to energy shipments via the Strait of Hormuz, with both the U.S. and Iran announcing renewed military strikes. This surge in oil prices influenced rubber futures as natural rubber competes for market share with synthetic rubber derived from crude oil.
Strong physical demand and short-covering supported the trading period last week, according to Japan Exchange Group. The report noted that robust demand from China’s tyre makers also contributed to the rise, with exports increasing by 4.8% year-on-year in June to reach 8.51 million tons, valued at $20.54 billion.
China's General Administration of Customs provided data indicating a steady growth in tyre exports. The front-month rubber contract on Singapore Exchange’s SICOM platform for August delivery was last traded at 215.5 U.S. cents per kg, up by 0.4% as of 07:03 GMT.
Market analysts suggest that the continued rise in oil prices and strong demand from China's tyre industry are likely to sustain the upward trend in rubber futures for the near term.
