The price of rubber in the Tokyo and Shanghai compact exchanges rose from its weakness and ended higher in trading today, Friday (05/10/2019), along with the recovery in crude oil prices.
Based on Bloomberg data, rubber prices for the most active contract in October 2019 at the Tokyo Commodity Exchange (Tocom) closed up 1.41 percent or 2.60 points at 186.70 yen per kg from the previous closing level of trade.
On trading Thursday (05/09/2019), the October contract rubber price ended at 184.10 yen per kg after falling 2.59 percent or 4.90 points at 184.10 yen per kg.
Rubber prices in Tocom were able to rebound even though the yen exchange rate was observed to continue its strengthening towards a sixth day in a row amid global market turmoil due to being hit by trade wars between the United States and China.
In line with rubber prices in Tokyo, rubber prices for the most active contract in September 2019 on the Shanghai Futures Exchange rebounded and closed up 55 points or 0.47 percent at 11,815 yuan per ton on Friday (10/5).
In trading on Thursday (9/5), rubber prices in Shanghai ended down 95 points at 11,760.
Meanwhile, the global Brent crude oil price for the July 2019 contract rose 0.60 percent or 0.42 points to as low as US $ 70.81 per barrel at 14.39 West Indonesia Time, heading for the third day of consecutive gains.
The West Texas Intermediate (WTI) crude for June 2019 shipments climbed 0.73 percent or 0.45 points to US $ 62.15 per barrel.
World crude oil prices were able to rise even when the US government realized higher import tariffs on China amid ongoing trade negotiations between the US and China.
Increasing tensions between the US and Iran, the crisis of Russian crude oil contamination, and the possibility of declining production from Venezuela point to a tighter supply situation and push prices higher.
As is known, synthetic rubber which is the main substitution material for natural rubber is made from oil-derived polymers, so the price movement is clearly influenced by the price of oil which is the original raw material.
At the same time, according to Kazuhiko Saito, analyst at brokerage Fujitomi, the price of RSS-3 grade rubber for shipping from Thailand rose to US $ 1.77 per kg at the end of last week amid a low production season in the country.
“The carriers maintain their bullish attitude because Thailand, Indonesia and Malaysia have agreed to limit exports to increase prices,” Saito added, as quoted by Bloomberg.
The strengthening of rubber prices in Shanghai was also boosted by the weakening of the Chinese yuan exchange rate against the US dollar amid the warming of the trade war with Uncle Sam’s country.
The lower yuan exchange rate makes this currency-denominated rubber futures contract more affordable for foreign buyers.
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