Jojo Mathew

Current Market Overview:
Japanese rubber futures have experienced a slight decline, with the Osaka r May delivery falling by 0.59% to 368.8 yen per kg ($2.39) as of early trading today. This drop reflects ongoing concerns about global demand for rubber, particularly in light of disappointing economic data from China, the world’s largest consumer of the commodity.

Key Factors Influencing Prices:

Global Demand Concerns:
The May rubber on the SHFE also saw a decline, dropping 1.41% to 17,730 yuan ($2,429.47) per metric ton. This decline is attributed to weaker-than-expected consumption data from China, which raises doubts about future demand .

Economic Context:
Recent economic indicators from China have shown unexpected weakness, which could hinder economic growth. This situation is compounded by ongoing tariff threats and the slow impact of Beijing’s fiscal stimulus measures.

Oil Prices and Competition:
Falling oil prices, influenced by the U.S. Federal Reserve’s decision to slow interest rate cuts, add complexity to the rubber market. Natural rubber competes with synthetic rubber, which is derived from crude oil, making fluctuations in oil prices particularly impactful.

Currency Effects:
The Japanese yen has weakened, reaching a one-month low of 154.88 per dollar. This depreciation makes yen-denominated assets more attractive to foreign buyers, providing a cushion against the falling rubber prices driven by global demand concerns.

Market Sentiment:
The Nikkei index has also reacted negatively, falling 1.8% as investors anticipate the outcomes of the Bank of Japan’s upcoming policy meeting .

Conclusion:
The current landscape for Japanese rubber futures is characterized by a combination of declining prices due to global demand concerns and a weaker yen that may help mitigate some of the adverse effects. Investors should remain vigilant as economic conditions evolve, particularly in relation to China’s consumption patterns and global oil prices.

India:
The rubber price outlook for India remains uncertain as the market reacts to both local and international influences. While favorable weather conditions may improve yields, the overall production is likely to remain below previous levels. Stakeholders should be prepared for potential price volatility as global economic conditions evolve and local supply adjusts to changing demand dynamics.

Overview
Japanese rubber futures have shown a modest rebound, marking a second consecutive session of gains. This comes amid ongoing supply disruptions that are countering concerns about weaker demand.

Market Movements

Osaka May contract rose by 0.7 yen, or 0.19%, reaching 373.6 yen ($2.43) per kg. This rise is attributed to supply constraints primarily influenced by adverse weather conditions in major producing regions.

SHFE May contract eased by 25 yuan, or 0.14%, settling at 18,440 yuan ($2,531.12) per metric ton. High raw material prices continue to support rubber prices, although sluggish downstream demand pressures the market.

SICOM january contract last traded at 198.9 U.S. cents per kg, reflecting a slight decrease of 0.2%.

Supply Concerns
Significant supply disruptions have been reported:

China’s Yunnan Region: Harvesting has ceased.
Hainan: Production is being gradually reduced.
Southern Thailand: Recovery in output is slow due to ongoing rainfall.

These factors contribute to a tightening global supply situation, raising concerns about future availability.

Demand Dynamics
Despite the supportive supply cuts, demand remains a concern. Recent data shows mixed performance in China’s economy, with industrial output growth slightly accelerating while retail sales have disappointed. This ongoing weakness in domestic consumption is prompting the Chinese government to enhance fiscal support and social security measures heading into 2025.

Currency and Economic Context
The yen was marginally weaker at 154.17 per U.S. dollar, continuing a trend of seven consecutive sessions of decline. A weaker yen typically makes yen-denominated assets more attractive to foreign buyers, though the rising U.S. dollar complicates this dynamic.

Conclusion
The rubber market is navigating a complex landscape influenced by supply chain vulnerabilities, particularly in Thailand, and mixed economic signals from China. As weather-related disruptions continue to pose risks, market participants are closely monitoring developments, especially the upcoming Federal Reserve meeting, which could further impact commodity prices and economic stability.

Outlook
The interplay between these factors suggests a cautious outlook for the rubber market as it heads into the new year.

27-06-2024

Japanese rubber futures rebounded on today as the yen hit a 38-year low against the dollar, making the commodity more affordable to overseas buyers.

The Osaka Exchange December delivery was up 2.5 yen, or 0.75% and SHFE September delivery was up 65 yuan, or 0.43%.

Oil prices slid in early Asian trade today as a surprise build in U.S. stockpiles fuelled fears about slow demand from the top oil consumer.

Top rubber producer Thailand’s meteorological agency warned of “heavy to very heavy rains and accumulations that may cause flash flood and runoff” on June 27.

The International Rubber Study Group projects global Natural rubber production to increase by 1.1% year-on-year in 2024, reaching 14.502 million tons.

On the demand side, global consumption of Natural rubber is anticipated to rise by 3.1% year-on-year in 2024, totaling 15.748 million tons.China is expected to lead this growth with a 5.5% increase, followed by India at 3% and Vietnam at 6%.

Inventory levels at the key Qingdao warehouse have dropped by 28% since the beginning of the year, suggesting a possible uptick in Chinese rubber consumption.

The tire industry is being cautious in their procurement of high-priced rubber materials.

Heavy rainfall has caused disruptions in the harvesting of natural rubber, resulting in a decrease in its availability in the local markets.

Due to heavy rains, low arrivals, and increase in shipping costs, natural rubber can remain expensive for importing countries.

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11-06-2024

Rubber News For Today
11-06-2024

Japanese rubber futures edged down Today on profit taking in view of heightened uncertainty on rubber yields and top consumer China’s stockpiling decisions. Higher oil prices and a weaker yen limited losses.

The Osaka Exchange November delivery was down 5.5 yen, or 1.54%, and (SHFE) September delivery reopened after the Dragon Boat Festival holidays and was down 115 yuan, or 0.73%.

Attention should be paid to China’s stockpiling policy and the improving rubber tapping in production areas of various rubber producung countries.

Oil prices rose today, extending the previous day’s rally on hopes of higher seasonal fuel demand and potential U.S. crude purchases for its petroleum reserve, though gains were capped by a firmer dollar.

The tight supply of all forms of natural rubber will support the prices to stay high in short run.

For daily price & trend updates please subscibe our service

Rubber India
9495989460

Tire manufacturers are raising prices as a result of the rubber shortage in major markets. The price of RSS-4 grade rubber went up by Rs 200 to trade at 18,600 in a single day. Rubber exporting countries are getting ready to increase sheet prices in response to the expected rise in demand from the Asian tyre sector. Concerns are arising in the industrial sector about the potential shortage of sheet and latex due to heavy rains causing tapping interruptions in various rubber producing countries, including Thailand.