SunSirs: Natural Rubber Imports Under Pressure Amid Inventory Drawdown; El Niño Likely a Key Variable in Q4

[Introduction] Overall phenological conditions in domestic and overseas production areas have been relatively normal this year, with tapping operations proceeding smoothly. However, the rainy season has disrupted tapping, and overseas raw material output has fallen short of expectations; persistently high procurement prices have created strong cost-side support. Meanwhile, the inversion of domestic and international market prices has put overall import volumes under pressure. Latest customs data shows that China’s natural rubber imports in August totaled 486,000 tonnes—down 6.7% year-on-year and hitting a six-year low for the month. Domestic inventories continue to decline, and spot market liquidity remains tight. Looking ahead to the mid-to-late fourth quarter, the focus will be on whether El Niño leads to the anticipated production cuts.

High Raw Material Costs Erode Import Profits

Supply conditions in domestic and overseas production areas have been generally normal this year, with tapping off to a smooth start. Major production regions entered the rainy season after May; notably, rainfall increased in Thailand—particularly in the north and northeast—from late July onwards. Continuous rain caused temporary flooding in some areas, hindering tapping operations and affecting output pacing. Consequently, raw material prices remained high, bolstered by significant cost-side support. Although new rubber output increased month-on-month over time, procurement activity remained robust—supported by essential restocking demand from international tire manufacturers—due to rising domestic consumption and supply disruptions (production cuts and shipping issues) in markets like Indonesia and Africa. As a result, procurement prices stayed high; as of September 21, the purchase price for Thai cup lump rubber stood at 73.8 THB/kg, a year-on-year increase of 44.56%. Prices for rubber traded in USD also received strong cost-side support, leading to a persistent price inversion between domestic and international markets. Taking STR20# mixed rubber as an example, the RMB market price traded at a discount of 565.93 RMB/tonne relative to the USD-based duty-paid price; this inversion has resulted in consistently meager import profits.

Declining Cumulative Imports Tighten Domestic Supply Liquidity

According to the latest statistics from the General Administration of Customs of the People's Republic of China, the country's total natural rubber imports in August 2026 amounted to 486,000 tonnes, a year-on-year decline of 6.7%. Historically, this represents the lowest import volume for the month of August in six years. Cumulative imports from January to August totaled 4.0758 million tonnes, a year-on-year decrease of 45,600 tonnes (down 1%). Notably, import volumes from Vietnam, Malaysia, and Indonesia saw significant declines. Statistics show that cumulative natural rubber imports from Vietnam fell by 146,100 tonnes (down 19%) during this period, marking the sharpest contraction among source countries. The primary drivers of this decline were twofold: excessive rainfall hampered new rubber output, falling short of expectations; and a persistent price inversion between domestic and international markets—lacking the incentive of import profits—dampened domestic willingness to import. Consequently, with insufficient new rubber imports to replenish supplies, overall domestic spot inventories have continued to accumulate. However, for the week of September 18, total natural rubber inventories in the Qingdao region decreased by 17,400 tonnes; bonded zone inventories fell by 9,100 tonnes (down 9.35%) week-on-week, while general trade warehouse inventories dropped by 8,300 tonnes. With limited pressure from new rubber replenishment, total social inventories continued to draw down, and spot market liquidity remained tight—particularly regarding supplies of Vietnamese rubber.

Future domestic supply liquidity hinges largely on new rubber output during the overseas peak production season. Seasonally, the fourth quarter typically marks the transition from a low-yield period to peak production; however, the World Meteorological Organization has forecast an "extremely strong" El Niño event, expected to peak around year-end and persist until February 2027. Historical data suggests that a strong El Niño could lead to a reduction in global natural rubber supplies, meaning the release of new rubber during the peak season might fall short of expectations. Regarding price drivers, expectations of future supply contraction due to El Niño risks—combined with the broader context of a production capacity inflection point—could push up forward premiums, making prices more likely to rise than fall. (Source: Hexun)