Japanese rubber futures saw an uptick on Wednesday (24 July), driven by higher synthetic rubber and oil prices. The gains, however, were tempered by a stronger yen, which limited the potential for a more substantial rise.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery increased by 85 yuan, or 0.59%, to 14,525 yuan ($1,996.37) per metric ton. Additionally, the most active September butadiene rubber contract on the SHFE saw a rise of 110 yuan, or 0.75%, reaching 14,800 yuan per metric ton.
China, the world’s largest natural rubber consumer and a major importer, relies heavily on imports as its domestic production only meets a small portion of its demand. On July 23, China’s top economic planner declared its plan to assist high-quality companies in securing medium- and long-term foreign debt to enhance the development of the real economy, according to an official online statement.
In the meantime, Thailand’s meteorological agency has issued a warning about heavy rains and the risk of flash floods and overflows from July 23-29. As the world’s largest rubber producer, Thailand’s weather conditions are closely watched, further bolstering rubber futures.
On the Singapore Exchange’s SICOM platform, the front-month rubber contract for August delivery last traded at 162 U.S. cents per kg, marking a 1.1% increase.
Rubber Cross-Arbitrage
Cross Arbitrage opportunities are usually used for futures as the response time is faster and it is easier to apply the strategy. It is also important to note that arbitrage strategies are usually done where delivery bids are similar and where the price movements of futures contracts in different markets have a very strong correlation.
The location of the exchange can also affect the proportion of investments. Factors that can affect arbitrage include:
- Differences in contract size
- Currencies
- Change in tax rate
- Policies on domestic storage, customs policy adjustment, and industry policy changes
These factors will cause price differences amongst different exchanges in different countries. Cross-Arbitrage also works for other Futures contracts such as Refined Copper Arbitrage Trading and more.
Where are Rubber Futures Traded?
Due to its popularity, Rubber Futures are traded on several different Exchanges. Traders can trade Rubber Futures from Singapore Exchange (SGX), Shanghai International Energy Exchange (INE), and Osaka Exchange Incorporated (JPX) through Orient Futures Singapore.
Orient Futures is a futures trading Singapore company and is an indirect subsidiary of Shanghai Orient Futures.
INE offers TSR20 Rubber Futures contracts, JPX offers Rubber RSS3 Futures, and SGX offers both SICOM RSS3 and TSR20. Traders can also capitalize on rubber cross-arbitrage, capitalizing on the price differences of rubber from different markets.
SGX Rubber Futures Contract Specifications
SGX TSR20 Rubber Contract Specification
The SGX TSR20 Rubber Futures contract follows the following specifications:
The SGX TSR20 Rubber Futures Contract has a minimum price fluctuation of 0.1 USD/kg.
SGX TSR20 Rubber Futures Ticker symbol: TF
SGX RSS3 Rubber Contract Specification
The SGX RSS3 Rubber Futures contract follows the following specifications:
The SGX RSS3 Rubber Futures Contract has a minimum price fluctuation of 0.1 USD/kg.
SGX RSS3 Rubber Futures Ticker symbol: RT
SGX Rubber Futures Contract Period
Contract months are monthly all year round, with next consecutive month added upon each month’s expiry.
The last trading day of the SGX Rubber Futures contract month is the last day of trading of the month preceding the Delivery Month.
SGX Trading Hours
SGX Trading Hours are as follows:
9:00am – 11:30pm/ 1:30pm – 3:00pm, Beijing Time, Monday to Friday, and other trading hours announced by DCE. (T-session)
Market News
The rise in synthetic rubber prices played a significant role in buoying the overall rubber market. Synthetic rubber, a key competitor to natural rubber, is derived from crude oil, making its price closely tied to oil market fluctuations.
As oil prices bounced back after a period of decline, driven by decreasing U.S. crude inventories, this created a favorable environment for synthetic rubber prices, which in turn affected the natural rubber futures market.
Further influencing the market was the anticipation of a ceasefire deal in the Middle East, which helped stabilize oil prices. While the stronger yen acted as a limiting factor, the interplay between synthetic rubber and oil prices remains crucial for the natural rubber market. As the global economic landscape continues to evolve, the rubber market is likely to remain sensitive to fluctuations in related commodities and geopolitical developments.
Start Trading with Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us, opening additional trading avenues.
Expect streamlined processes and an easy-to-use interface designed for minimal latency, accompanied by our team’s round-the-clock availability on trading days to provide assistance for all your trading needs.
