Rubber futures climb to a two-month high as seasonal production cuts and rising oil prices drive gains

(1) Japanese rubber futures touched a two-month high on Thursday, with the main contract closing near 438 yen per kilogram. The market traded based on expectations that supply would shrink after the peak production period in Southeast Asia ends in September. (2) The January contract on the Shanghai Futures Exchange also rose by over 1%, while the butadiene rubber contract showed a slight decline. The divergence between varieties reflects supply and demand differences across different segments of the industry chain. (3) Some traders pointed out that as September approaches, the main producing areas are gradually entering the off-season, and the market is pricing in a seasonal contraction ahead of time. Meanwhile, the continued strength in crude oil prices provides additional support for natural rubber prices. (4) Rubber and synthetic rubber have a competitive substitution relationship; rising oil prices push up synthetic rubber costs, which indirectly benefits demand prospects for natural rubber. The near-month contract on the Singapore Exchange also recorded moderate gains.