Japanese rubber futures edge higher, supported by oil prices and concerns over production in producing regions

⑴ Japanese rubber futures edged up slightly on Thursday, with the Osaka Exchange March delivery rubber contract rising by about 3.2 yen, an increase of approximately 0.7%, to around 452 yen/kg. ⑵ Oil prices rose more than $2 per barrel on the day, as the escalation of the attack on Saudi Arabia increased market concerns about the expansion of the conflict and disruptions to crude oil supply from key export regions. Natural rubber tends to follow oil price trends due to competition with synthetic rubber for market share. ⑶ According to analysis institutions, rubber production in major Southeast Asian regions has fallen short of expectations, with production in southern Thailand limited by the aging of rubber trees. ⑷ The Shanghai Futures Exchange January delivery rubber contract fell by about 0.5%, the butadiene rubber contract rose by around 0.8%, and the Singapore SICOM January delivery rubber contract dropped by approximately 0.8%. ⑸ Overall, firm oil prices and concerns over supply in production regions are supporting Japanese rubber, but slow recovery in downstream tire demand and inventory cycles are limiting the gains. Attention going forward will be on weather conditions in Southeast Asian production regions and movements in crude oil prices.