By Emily Ou Yong
Japanese rubber futures rose on Friday, on firm upstream raw material costs that offset a weakening demand outlook in China.
The Osaka Exchange (OSE) rubber contract for December delivery TOCOM:TRB1!, TOCOM:TRB1! was up 4.3 yen, or 1.06%, at 410.3 yen ($2.55) per kg.
The contract edged down 0.07% this week, as Friday's gains pared earlier losses.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery SHFE:RU1! rose 115 yuan, or 0.69%, to 16,755 yuan ($2,471.60) per metric ton.
The most active September butadiene rubber contract on the SHFE (SHBRv1) gained 380 yuan, or 3.24%, to 12,125 yuan per metric ton.
Firm raw material prices are making it difficult for processors to lower prices further, even as futures markets have fallen sharply in recent sessions, said Farah Miller, CEO of rubber analytics firm Helixtap Technologies.
Today's gains may also reflect a technical rebound following last week's steep losses, she added.
A Singapore-based rubber trader echoed the view, saying raw material prices have remained firm despite the drop in futures, providing a level of support to the market.
The firmness in upstream costs was reflected in Thailand's benchmark export-grade smoked rubber sheet (RSS3) (RUB-RSS3C-BKK) and block rubber (RUB-STR20C-BKK), which rose 1.12% and 0.1%, to stand at 94.95 baht per kg and 78.03 baht per kg, respectively.
However, the trader cautioned that demand for China's rubber exports is weakening alongside softer domestic consumption, suggesting the recovery may be limited in scope.
The front-month rubber contract on Singapore Exchange's SICOM platform for August delivery SGX:TF1! last traded at 211.4 U.S. cents per kg, up 1.2% as of 0735 GMT.
($1 = 160.7900 yen)
($1 = 6.7790 Chinese yuan)