China Covid moves shape rubber futures trends

Tokyo - As 2022 reached a close, natural rubber futures prices were closely attuned to trader sentiment around changes to China’s easing of Covid restrictions amid a sharp rise in the number of infections in the country.

In the final full trading week of December, world rubber futures closed sharply lower on renewed speculative selling after news of China's sharp surge in COVID cases, JPX reported 26 Dec.

Over the five days to 23 Dec, rubber futures prices on the Osaka exchange fell 4.8% with active transactions, according to JPX’s weekly review of trading on Far East markets.

In China, meanwhile, SHFE and INE futures closed down 3.6% and 5.3%, respectively, noted the Tokyo-based exchange, adding that Singapore SICOM futures dropped by 4.4%.

JPX linked the market reversals in large part to reports of a rapid rise in Covid infections in China. In addition, it said, China's weak vehicle sales in November, which fell by 176,962 units, accelerated the bearish sentiment.

The Japanese Yen strengthened by 5% on 20 Dec after the Bank of Japan adjusted its policies, allowing long-term yields to 0.50% from the previous level of 0.25%, the report also noted.

The BOJ's policy changes, said JPX, “fuelled speculations of possible exit policy from the negative interest rate next year and concerns about going into recession, pushing the Japanese stock markets downward.”