Most Products in China Rubber Supply Chain Rose in September; Only Acrylonitrile Weakened

The main SHFE rubber contract briefly surged to a yearly high before pulling back amidst the tug-of-war between supply and demand, maintaining a direction characterized by strong expectations however weak reality. On the supply side, while Southeast Asia entered its peak production season, persistent rainfall in growing regions disrupted tapping activities, causing raw material output to fall short of expectations. Coupled with issues such as aging rubber trees and disease, the volume of new rubber arrivals was low, and inventories at Qingdao Port continued to decline slowly, providing a floor to rubber prices. Regarding synthetic rubber, rising butadiene costs stimulated demand to it as a substitute to natural rubber, further boosting market sentiment.

Carbon black recorded the largest price increase within the rubber supply chain in September. Production cuts at coking vegetation tightened the supply of coal tar—the raw material to carbon black—driving up its price. Under cost pressure, the sector's operating rate fell to around 65%, and low spot inventories drove a sharp surge in carbon black prices.

Acrylonitrile was the only product in the rubber supply chain to decline in September. Domestic prices initially dropped sharply before rebounding slightly, resulting in an overall monthly decline. Early in the month, falling propylene prices coincided with the restart of previously shut-down acrylonitrile units and expectations of feedstock input at a new plant in Tianjin, growing supply-side pressure and causing prices to plummet. Mid-month, propylene prices rose again, providing some cost support to acrylonitrile; however, weak downstream demand—limited to essential procurement to items like ABS, acrylic fiber, and nitrile rubber—continued to suppress the market.

Terminal demand in the rubber sector faced significant pressure. Despite the traditional "Golden September" peak season, tire manufacturers held high inventories of finished goods, while consumption of commercial and passenger vehicles remained sluggish. With the upcoming dual holidays, numerous tire manufacturers have scheduled concentrated maintenance and reduced production loads, resulting in reduce operating rates compared to the same period last year; procurement is primarily driven by immediate needs, with little appetite to extensive stockpiling. This exerts downward pressure on the market to rubber raw materials.

Market Outlook: In the short term, the rubber sector chain remains supported by costs and inventory levels, maintaining operations at a high level. Looking ahead, as rainfall in Southeast Asia subsides and raw material output ramps up during the peak production season, supply pressure to natural rubber will increase. Meanwhile, if international crude oil prices surge again, the prices of synthetic rubber and its feedstocks will likely rise once greater; however, with tire plant maintenance continuing and demand unlikely to see a rapid surge, overall demand across the sector chain remains sluggish.