Japanese Rubber Future Soaring to New Heights
- 27-Jan-2023 10:53 AM
- Journalist: Peter Schmidt
Japanese rubber futures extended their rally on Thursday to reach their highest level in more than three months, due to strong demand driven by hopes of economic recovery in China, despite reduced trading activity as a result of the Lunar New Year holiday. The Osaka Exchange rubber contract for July delivery climbed 0.8 yen (0.3%) to 225.8 yen ($1.75) per kg, its highest since October 11th. The OSE’s January contract expired the day prior at 218.0 yen per kg. Trading in China's financial markets have been paused until Monday, Jan 30th due to the national holiday celebration which started on Jan 21st.
Japan’s Nikkei share average opened 0.18% up this morning, as rubber demand sentiment soared due to China's easing of its stringent COVID-19 restrictions. Since the start of the pandemic, these restrictions had been dampening both consumption and industrial activity.
According to the Center for Disease Control and Prevention, critically ill COVID-19 cases in China have decreased by 72% since their peak early this month, while daily deaths among COVID-19 patients in hospitals have declined 79% from their peak.
Japan's outlook on its economy worsened drastically in January, with exports suffering due to the COVID-19 pandemic and slowdown in global demand for tech and semiconductors - particularly in Asia. This news, along with poor corporate results and a yield curve inversion which usually signals an impending recession, caused global stock markets to nosedive. Singapore Exchange’s rubber contract for February delivery last traded at 146.1 US cents per kg, showing a slight increase of 0.1%.