Rubber futures hit by excess supply, global economic concerns

Tokyo - Rubber futures pricing has continued on a downward track, closing the trading week to 19 Aug lower across all major Far East exchanges.

In its latest weekly report, issued 22 Aug, the Japanese JPX exchange said “new short positions by speculators pushed the prices to the lowest level.” 

Tokyo-based JPX linked the decline to “mountains of bearish news” from China, including sluggish economic data, with weaker Industrial production and retail sales in July. 

Meanwhile, China's total vehicle sales fell to 82,235 units in July compared to the previous month of 2,420,058 units. 

In addition to the zero-Covid policy, China is now facing heat waves and drought, the JPX report also pointed out.

Rubber traders were also unsettled by economic data from Japan, which posted annualised second quarter GDP growth of 2.2%, lower than market expectations. 

In Osaka, OSE rubber futures dropped 1.2%, while on China’s SHFE and INE exchanges prices fell by 2.4% and 2.5%, respectively. Prices on Singapore’s SICOM closed 3.7% lower. 

According to JPX, the outlook for rubber futures markets “remains bearish” as the world economy faces a slowdown creating fears of a possible global recession. 

“Rubber prices could be affected by excess supplies and weaker demand caused by global recessions” concluded the JPX weekly report.