News

February 18, 2025

Rubber India

Overview
Japanese rubber futures exhibited limited movement today as traders assess the impact of a stronger yen alongside China’s efforts to invigorate private sector confidence. Notably, demand for rubber from China, the largest consumer, continues to falter, contributing to a cautious market sentiment.

Market Highlights

Osaka July delivery (JRUc6) declined by 0.3 yen (0.08%) to 371.2 yen ($2.45) per kg.

SHFE May fell by 140 yuan (0.78%) to 17,755 yuan ($2,440.82) per metric ton.

The February butadiene rubber dropped 240 yuan (1.68%) to 14,010 yuan ($1,925.98) per metric ton.

SICOM March delivery last traded at 201.9 U.S. cents per kg, down 0.6%.

Currency Impact
The yen (JPY=EBS) held steady at 151.61 per dollar, gaining nearly 4% against the dollar since the beginning of 2025. A stronger yen reduces the affordability of yen-denominated assets for foreign buyers, adding pressure to prices.

Supply and Demand Dynamics

Production Trends:8 Recent reports indicate lower-than-expected rubber destocking at Qingdao port, while production in downstream companies has accelerated. However, poor shipment conditions are dampening raw material demand.

Chinese Market: Despite efforts by President Xi Jinping to engage with major technology leaders to bolster sentiment, overall economic growth remains sluggish, further impacting rubber demand.

Inventory Levels: As of February 9, 2025, total natural rubber inventory in Qingdao rose to 569,000 tons, indicating a 3% increase. The social inventory across China reached 1.363 million tons, reflecting ongoing accumulation amidst weak demand.

Outlook
The market is navigating mixed signals, with supply constraints from major producing regions like Vietnam and Northeast China due to seasonal harvesting suspensions. However, downstream manufacturers are primarily focused on depleting existing inventories rather than ramping up purchases.

As the Spring Festival concludes, an influx of natural rubber latex shipments is expected, which may increase spot circulation at ports. Despite rising cost support from decreased overseas supply, limited demand could lead to a volatile market landscape.

Key Considerations

Supply Shrinkage: Seasonal harvesting suspensions in key regions may lend support to rubber prices.

Weak Demand: Downstream manufacturers are cautious, limiting short-term purchasing activity.

Market Volatility: The interplay of rising costs and stagnant demand may result in continued price fluctuations.

In conclusion, the rubber market is characterized by a stalemate influenced by both supply constraints and weak demand, suggesting a complex environment for traders in the coming weeks.

Market Overview

Natural rubber prices experienced a slight increase today, driven by concerns over potential supply disruptions in Thailand and rising oil prices. Despite these upward pressures, gains were limited due to a stronger yen and mixed market conditions.

Price Movements

Osaka June rubber rose by 0.4 yen (0.1%), reaching 384.2 yen ($2.47) per kg.

SHFEe March rubber increased by 170 yuan (0.99%), settling at 17,425 yuan ($2,376.80) per metric ton.

Butadiene Rubber: February contract surged by 485 yuan (3.41%), closing at 14,705 yuan ($2,005.78) per metric ton.

Supply Factors
The Thai meteorological agency reported that the northeast monsoon is expected to strengthen, bringing thunder showers and isolated heavy rains. This weather pattern poses a risk to rubber production in Thailand, the world’s top supplier, potentially affecting overall supply levels.

Oil Prices Influence
Oil prices rose over 2% on Wednesday, spurred by a significant draw in U.S. crude stockpiles and concerns over supply disruptions from new U.S. sanctions on Russia. Since natural rubber competes with synthetic rubber (derived from crude oil), fluctuations in oil prices often impact natural rubber pricing.

Currency Impact
The Japanese yen strengthened against the U.S. dollar, which decreased by 0.93% to 156.49 yen, following comments from the Bank of Japan’s governor regarding potential interest rate hikes. A stronger yen makes yen-denominated rubber assets less affordable for overseas buyers, which may temper price increases.

Market Sentiment
Despite the positive movement in rubber prices, stocks in China, a major consumer, closed lower as investors await further government stimulus measures. This cautious market sentiment may influence future demand for natural rubber.

Conclusion
Today’s price movements in the natural rubber market reflect ongoing supply concerns and rising oil prices, tempered by currency fluctuations and mixed market signals from China. The outlook remains vigilant as traders monitor developments in both supply conditions and global economic factors.

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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