Rubber futures reach 'lows' amid China economic worries

Tokyo – Natural rubber (NR) futures saw a downward trend during the trading week ended 4 Aug across all major Far East exchanges, amid decreased trading volumes.

With the market lacking new "catalysts”, several exchanges saw prices for the commodity reach "new lows", Japan Exchange Group (JPX) reported 7 Aug.

More generally, according to JPX's weekly analysis, fundamental and technical indicators “continue to show a persistent bearish trend.”

On Japan’s Osaka Exchange, OSE rubber (RSS3) dropped 1%, while open interest reached a new high in two years.

In China, SHFE’s most active rubber (SCR/RSS) contract for September delivery fell 1.5%

On China's INE exchange, meanwhile, active TSR rubber contracts for October delivery declined 1.4%.

The declines, according to the latest JPX report, were accompanied by “significant decreases” in trading volume.

Singapore’s SICOM rubber (TSR 20) futures for October delivery also lost 2%, in trading characterised by light selling activity.

Overall, JPX linked the declines in NR futures pricing to “lingering concerns” among traders about direction of the Chinese economy.

“China's weakened rubber demand and high inventories have created downward pressure on global prices,” remarked the Tokyo-based group.

Pressure was further intensified by China’s manufacturing data for July, which registered a decline for the fourth consecutive month.

Furthermore, JPX said the rubber industry is facing challenging conditions with, for instance, Indonesia seeing the closure of nine factories in Northern Sumatra.

Moreover, it said, low tapping activity, due to the persistently low prices, is threatening the supply of rubber raw materials, such as cup lumps.

Selected NR futures price trends on major trading exchanges