Natural Rubber Prices Continue to Rise; Supply-Demand Gap Sustains High-Level Performance

I. Spot Market Performance and Price Positioning as of might 27

As of might 27, the mainstream trading range to spot natural rubber remained between 17,500 and RMB17,900 per ton, with the SunSirs benchmark price simultaneously hovering at a two-year high. Compared to the start of the year, prices have surged by over RMB2,200 per ton—a cumulative increase approaching 14%.

From a historical perspective, current market prices have not yet reached historical extremes; they merely represent a high point to this specific period within the last two years. The market remains situated within a medium-term upward channel and does not constitute a "historical peak"—a major cyclical high point signaling a definitive, prolonged top. Spot market circulation remains tight, holders maintain a firm stance on pricing, and downstream consumers continue to procure supplies to meet their essential, rigid demand.

II. Domestic Production Capacity and the Global Supply Landscape

Domestic natural rubber production capacity is primarily concentrated in two major regions: Hainan and Yunnan. While tapping commenced slightly earlier this year compared to previous years, persistent high temperatures and drought conditions throughout April stifled latex output. Entering might, increased rainfall in the production zones alleviated the drought, leading to a month-on-month recovery in raw material output; however, the overall increase remains limited—insufficient to alter the prevailing tight supply landscape.

On the international front, the global natural rubber market is characterized by a "tight stability," wherein production volumes fall short of demand. In Thailand—the world's leading producer—capacity development remains sluggish due to aging rubber trees and the conversion of rubber plantations to other crops, while output development in other producing nations, such as Indonesia and Vietnam, remains steady. Furthermore, with the approach of the El Niño climate phenomenon this year, expectations of reduced yields caused by high temperatures and drought in major production regions are intensifying. This serves to further reinforce expectations of a tightening global supply, thereby providing medium-to-prolonged support to rubber prices.

III. April Customs Import Data and Current Inventory Status

According to customs data, domestic natural rubber imports in April maintained a year-on-year development trajectory. The volume of overseas shipments arriving at domestic ports continued to rise steadily, with the majority of supplies originating from the major rubber-producing nations of Southeast Asia. Cumulative import volumes to the first four months of the year showed a significant year-on-year increase, reflecting strong domestic restocking activity driven by essential demand.

Regarding inventory levels, Qingdao—the nation's largest rubber distribution hub—has continued to see a drawdown in both bonded-zone and general-trade inventories. Weekly inventory figures have trended downward consecutively, positioning overall stock levels at a comparatively low point to the year. Under this low-inventory regime, the market's buffer capacity is limited; should demand continue to be released steadily, it could very easily trigger a further upward movement in prices.

IV. Key Factors Driving Price Increases

1. A Structural Global Supply-Demand Deficit: Global natural rubber demand is projected to surpass production volumes this year; consequently, the fundamental supply-demand stability inherently possesses upward momentum.

2. Disruptions Driven by Extreme Weather Expectations: With the onset of El Niño conditions approaching, the main production regions face risks of drought and uneven rainfall. These factors could impact annual tapping yields, prompting the market to preemptively price in expectations of reduced production.

3. Steady Recovery in Downstream Demand: Domestic production and sales of new energy vehicles are experiencing rapid development, while exports of finished automobiles have surged significantly. This direction is stimulating a recovery in essential demand within the tire sector. Meanwhile, demand from industries such as latex items and medical consumables remains stable, demonstrating strong overall consumption resilience.

4. Transmission of Energy Costs: Geopolitical conflicts in the Middle East have driven up international oil prices, subsequently boosting the cost of synthetic rubber. This creates a supportive floor to natural rubber prices—acting as a competitive substitute—and indirectly pushes up overall rubber price levels.

5. Heightened Enthusiasm to Raw Material Procurement: High spot market prices are incentivizing rubber farmers to increase tapping activity. Simultaneously, processing companies are actively locking in supplies and competing to acquire raw materials ahead of schedule, further tightening the supply of circulating stock in the market.

V. Benchmark Prices and Sales Performance of Upstream and Downstream items (might 27)

Upstream raw materials—specifically latex and ribbed smoked sheets (RSS)—have risen in tandem with the broader market. Quotes to imported RSS from Southeast Asia remain firm at elevated levels, providing solid cost-side support. Downstream items—including tires, polybutadiene rubber, and carbon black—have also seen their benchmark prices direction upward. Tire manufacturers are maintaining stable operating rates with smooth order fulfillment, while the latex items and footwear material sectors continue to exhibit steady procurement driven by essential demand. Overall market sales performance remains robust, indicating efficient price transmission across the entire sector chain.

VI. Outlook and Forecast

Supported by the structural supply-demand deficit, low inventory levels, and weather-related market speculation, natural rubber prices retain further upside possible. A pattern of high-level evaporative environment with an underlying bullish bias is expected to remain the dominant market theme. while production volumes in domestic growing regions have recovered sequentially, the incremental output remains limited and is insufficient to offset the prevailing tight global supply-demand stability. Overall, the pattern of natural rubber trading at elevated levels has have become established. Moving forward, key factors to watch regarding market trends include weather changes in producing regions, the pace of import arrivals, and the sustainability of operating rates in the downstream tire sector.