27 Feb 2024
“Significant speculative and Chinese commodity fund buying” helped to drive prices, according to JPX
Tokyo – Natural rubber (NR) futures closed the trading week ended 23 Feb “strongly higher” across all major exchanges, according to the Japan Exchange Group (JPX).
In Osaka, Japan, OSE rubber futures increased by 2.8% week-on-week, while on China’s SHFE and INE exchanges prices rose by 4% and 6.5% respectively.
In Singapore, SICOM rubber futures closed 5% above prior-week levels in active trading, JPX added in its weekly market review issued 26 Feb.
JPX linked the recent price highs to “significant speculative and Chinese commodity fund buying”.
Optimism, it said, “prevailed” regarding the Chinese economy, especially after a move by the China's central bank to cut its five-year loan prime rate by 25 bps to 3.95 percentage points.
Furthermore, physical demand for NR was observed during the trading week, with prices trading at a premium of 19-20 cents/kg over the spot month SICOM TSR20 futures price.
According to JPX, speculative and arbitrage buying further fuelled the rally in rubber futures pricing.
The report went on to note supply-side factors, including concerns about potential rubber shortages in producing countries like Thailand and Indonesia.
Such speculation, suggested JPX said, could drive prices significantly higher when demand increases.
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