SINGAPORE: Japanese rubber futures dipped for a second straight session on Wednesday, as confidence in China’s recovery momentum continued to falter amid dismal factory data, while a plunge in crude oil prices dragged the contract lower. Osaka Exchange’s rubber contract for November delivery finished 1.0 yen, or 0.5%, lower at 208.0 yen ($1.54) per kg. The benchmark OSE contract fell 0.3% this month, the fourth consecutive monthly drop. The rubber contract on the Shanghai futures exchange for September delivery fell 60 yuan to finish at 11,830 yuan ($1,711.49) per tonne. Japan’s benchmark Nikkei average closed 1.41% lower.
“Current demand for rubber has been very weak, especially in China as its inventory has reached an all-time high,” said a Singapore-based trader, adding that export of tires dropped, while orders for Q2 remained sluggish. Either raw material prices need to come down or Singapore rubber stocks should go up as a majority of producers are producing at a loss right now, and prices are only expected to dip further as peak production approaches in June, the trader said.
China’s factory activity contracted faster than expected in May, while profit at China’s industrial firms slumped in the first four months of 2023, knocking Asian financial markets lower. Japan’s factory output in April fell 0.4% from the previous month, government data showed, less than the median market forecast of a 1.5% gain.