SunSirs: Natural Rubber: Supply Disruptions Coupled with Low Inventory Drive High-Level, Firm-Biased Volatility

Currently, the global natural rubber market is characterized by a specific landscape: tapping operations in Southeast Asia are hindered; domestic production regions are seeing a slow ramp-up in output; port inventories continue to be drawn down; raw material prices remain firm; and rigid demand remains stable. International production regions are experiencing frequent weather disruptions, resulting in a lower-than-expected release of new-season latex, while raw material procurement prices remain elevated. Domestically, the release of production capacity is limited, import volumes have seen a seasonal decline, and low inventory levels are providing support to spot market prices. Although downstream rigid demand remains stable, restocking activities are cautious; consequently, rubber prices are caught in a tug-of-war between contracting supply and subdued demand, generally maintaining a pattern of high-level, firm-biased volatility.

I. International Situation and Cultivation Status

Disruptions on the global natural rubber supply side have intensified. While the major production regions in Southeast Asia have entered their tapping season, persistent weather issues continue to constrain output. In mid-May, increased rainfall across northern, central, and southern Thailand raised the risk of flash floods in certain areas, hindering tapping operations. Consequently, latex output declined on a month-on-month basis, and the price of cup lump rubber surged to a high of 68 Thai Baht per kilogram. In Vietnam and Indonesia, the progress of tapping operations has been slow, and the pace of raw material release has fallen short of expectations. Compounded by rising expectations regarding the El Niño climate phenomenon, market concerns regarding a contraction in global supply have intensified. Domestically, earlier droughts in the Hainan and Yunnan production regions caused delays in the start of the tapping season; while operations began to gradually recover following rainfall in May, latex output remains sluggish. Processing plants are actively competing to procure raw materials, keeping procurement prices firm and thereby supporting spot market costs.

II. Export Data: Steady Growth in Q1 Exports; Slight Year-on-Year Increase in Imports

According to customs data, from January to March 2026, the export volume of products related to China's natural rubber industry chain totaled 83,000 tons. This represents a 10.7% increase compared to the 75,000 tons exported during the same period in 2025, while the average export price remained stable at $1,780 per ton.

III. This Week's Capacity and Supply: Slow Start to Tapping Season; Effective Supply Remains Tight

Domestic natural rubber production capacity remains stable. Although the Hainan and Yunnan production regions entered their seasonal ramp-up cycle in May, overall output remains limited. This week, the daily domestic procurement volume of rubber latex remained at a low level. While latex concentrate processing plants maintained high capacity utilization rates, full-latex processing plants faced pressure on output due to persistently high raw material costs. In Southeast Asian production regions, the tapping rate for the new season remained below 60%; consequently, export volumes from Thailand and Indonesia declined year-on-year. For May, rubber arrivals at Chinese ports are projected to drop below 450,000 tons—a significant month-on-month decline. In the downstream tire industry, operating rates dipped due to the May Day holiday, with capacity utilization standing at 43.89% for semi-steel tires and 47.29% for all-steel tires; although rates have gradually recovered since the holiday, the momentum remains limited.

IV. Today's Price Trends and Fluctuations (May 14)

Today, the natural rubber spot market underwent a high-level consolidation with a bullish bias. Spot quotations remained stable or edged upward, while market activity was driven primarily by immediate, essential purchasing needs, resulting in steady transaction volumes.

SunSirs Benchmark Price: 17,958.33 RMB/ton—a daily increase of 0.98% and a monthly increase of 3.16%.

Amidst these high prices, downstream sectors continue to exhibit resistance; consequently, transaction activity remains largely confined to meeting immediate operational requirements.

V. Upstream and Downstream Price and Cost Dynamics

Upstream raw material prices remain firm; procurement prices for Thai cup lump and domestic latex are trading at high levels, thereby bolstering the production costs of natural rubber and reinforcing processing plants' resolve to maintain high selling prices. Downstream tire demand remains steady, and the terminal automotive market is experiencing a mild recovery; however, export orders for tires remain weak. Consequently, enterprises are focusing primarily on restocking only to meet immediate operational needs, showing little inclination for proactive inventory building, and their capacity to absorb high-priced rubber materials remains limited. Synthetic rubber prices are tracking at similarly high levels; supported by butadiene costs, quotations for cis-polybutadiene rubber hover around 14,500 RMB/ton. The price spread between synthetic and natural rubber remains within a reasonable range, ensuring stable substitution demand.

VI. Inventory Status: Continuous Port De-stocking Supports Price Resilience

Domestic rubber inventories within the Qingdao Bonded Zone have declined for three consecutive weeks, falling to 120,000 tons (a 29.5% year-on-year increase). Inventories outside the bonded zone stand at 599,000 tons (a 38.7% year-on-year increase); however, these stocks have also seen marginal reductions for five consecutive weeks, thereby alleviating overall inventory pressure. The combined effects of declining import volumes, increasing export volumes, and robust domestic consumption have sustained the trend of inventory de-stocking. These lower inventory levels provide strong support for spot market prices, keeping the basis spread on the stronger side.

VII. Future Market Outlook

Amidst supply disruptions, elevated raw material costs, and low inventory levels, natural rubber prices are expected to remain at high levels, exhibiting a volatile yet upward-leaning trend. Persistent adverse weather conditions in Southeast Asia, coupled with firm raw material prices, ensure that expectations of tightening supply remain entrenched. Meanwhile, the continued depletion of inventories lends resilience to prices. With downstream demand holding steady—though high price levels serve to cap upside potential—the market is broadly expected to fluctuate within a strong range.