Japanese rubber slips on profit-taking
The Osaka Exchange (OSE) rubber contract for January delivery ended daytime trade down 7.6 yen, or 2.28%, at 326 yen ($2.20) per kg. *The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery fell 390 yuan, or 2.52%, to 15,065 yuan ($2,101.67) per metric ton.
The most-active September butadiene rubber contract on the SHFE lost 365 yuan, or 2.96%, to 11,955 yuan ($1,667.81) per ton. Vietnam's tyre sector continues to struggle due to higher fixed costs, excess inventories in China, and sluggish demand, Japan Exchange Group said in a report on Monday.
Following a sharp rise in rubber prices over the past two weeks, profit-taking by funds has emerged, leading to a short-term pullback, a Singapore-based trader said.
The trader added that such corrections are healthy, emphasising that an overly rapid rise is unsustainable in the long run. Still, rainfall disturbances in domestic and foreign production areas persist, restricting rubber tapping and providing support to prices, said Chinese commodities data provider Longzhong Information.
Top rubber producer Thailand's meteorological agency warned of heavy rains and accumulations from July 28-29. Elsewhere, the United States and European Union agreed to 15% tariffs on automobiles.
Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres. Meanwhile, oil prices rose as the US-EU agreement lifted trade optimism. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month rubber contract on Singapore Exchange's SICOM platform for August delivery last traded at 170 US cents per kg, down 3.3%.
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