Narrowing Supply-Demand Gap Pressures No.20 Rubber

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Overall, the current 20# rubber market is in a state of weak supply and demand, with seasonal supply volume increasing and negative demand feedback continuing to deepen. The previous supply and demand gap that supported prices is gradually closing. Before the clear turning point in supply and demand appears, the market will digest the previous valuation premium in a way of consolidating the bottom.

In the middle and late June, the rubber sector accelerated its search to a bottom, with the prices of the three major rubber varieties experiencing a collective sharp decline. The main contract price of 20# rubber touched a new low since might, and the market direction clearly weakened. The core reason to this decline is that the market pricing logic has undergone a fundamental switch—from "real supply is tight" to "expected supply and demand will widen". This transformation is mainly reflected in two levels: First, the main production areas in Southeast Asia have entered the seasonal period of tapping rubber, and the supply pressure is gradually being realized. Second, the demand to downstream tires and items has continued to be sluggish, with the production rate under pressure and a lack of willingness to purchase raw materials. Under the dual suppression of a greater relaxed supply and sluggish demand, the supply and demand fundamentals that previously supported rubber prices have reversed, and the market valuation is facing systematic adjustment, with the price center under pressure to decline.

Supply side: The cycle of increased production is fulfilled, and structural differentiation is intensified.

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