Rubber Rally Far From Over as Global Market Supported by Supply Deficit and Positive EUDR Sentiment
Medan, May 7, 2026 — Global natural rubber prices continued to show a positive trend in early May 2026. After experiencing a fairly strong rally since late April, rubber prices on international exchanges are now moving steadily at elevated levels, with indications that the market is entering a consolidation phase.
Market monitoring at 7:00 a.m. WIB showed that the active June SICOM-TSR20 contract on the SGX stood at 220.9 US cents/kg, up 1.3 cents from the previous trading session.
Meanwhile, the active September RSS3 (RU) contract on the SHFE was recorded at 17,955, gaining 150 points from the previous session.
These conditions indicate that market sentiment toward the natural rubber commodity remains relatively solid, although market participants have begun to act more cautiously following the aggressive price increases seen throughout April and early May.
Price Rally Continues Since Early April
Based on daily trading data, TSR20 prices have strengthened quite consistently over the past month.
At the beginning of April 2026, prices were still at 198.8 US cents/kg before gradually rising to:
209.2 on April 22,
216.2 on April 28,
217.8 on May 5,
and reaching 219.6 on May 6, 2026.
With this morning’s position at 220.9 US cents/kg, the market has recorded gains of more than 11% compared to early April.
The increase indicates that the market continues to be supported by a combination of strong fundamental sentiment and expectations of tight global supply in the medium term.
Key Market Drivers
Several major factors continue to influence the direction of the global natural rubber market.
Crude Oil Prices Remain High
Relatively high global crude oil prices have pushed up synthetic rubber production costs. This condition makes natural rubber more competitive, particularly for the global tire industry.
The correlation between oil prices and synthetic rubber has once again become one of the supporting factors behind the strengthening of natural rubber prices in recent weeks.
Global Supply Remains Tight
Weather conditions in Thailand and several major producing regions in Southeast Asia continue to attract market attention.
Heavy rainfall in several production areas has caused tapping activities to remain less than optimal, leaving global supply relatively tight.
In addition, production recovery efforts in several producing countries have yet to fully normalize following weather disruptions earlier this year.
Global Consumption Still Higher Than Production
The Association of Natural Rubber Producing Countries has again projected that global natural rubber consumption in 2026 will remain higher than production.
The projection reinforces medium-term bullish sentiment, as the market is expected to remain in a supply deficit condition.
Demand from the automotive and tire industries in Asia is still considered fairly strong, particularly from China and India.
Market Begins Watching for Production Increase
On the other hand, market participants have started to pay attention to the potential increase in supply from Thailand and Vietnam following the end of the Labor Day holiday period in China.
The harvest season, which is beginning to improve, is expected to add more physical supply to the international market in the coming weeks.
Therefore, although the main trend remains positive, market volatility is still expected to remain high in the short term.
EUDR Developments Begin Providing New Sentiment
In addition to traditional fundamental factors, the global rubber market has also started to pay attention to the latest developments regarding the implementation of the European Union Deforestation Regulation (EUDR).
On May 4, 2026, the European Commission issued an EUDR simplification package aimed at reducing compliance costs and providing legal clarity before the regulation comes fully into force at the end of 2026.
One of the important points in the revision is the proposed exemption of retreaded tires from the scope of the EUDR.
Tyres Europe (formerly ETRMA) welcomed several of the revisions positively, although it still requested further clarification regarding technical implementation in the field.
According to Tyres Europe, the exemption for retreaded and test tires could help reduce administrative burdens considered irrelevant to the main objective of supply chain traceability.
In addition, the association stated that the European Commission has begun recognizing the “dual role” of tire manufacturers within the EUDR supply chain, namely:
as operators when importing natural rubber, and
as downstream operators when manufacturing and selling tires.
The distinction is considered important because it could reduce the need for repeated due diligence documentation throughout the distribution chain.
The European Commission even estimates that the latest simplification measures could cut annual compliance costs by around 75% compared with the original regulatory draft.
Nevertheless, Tyres Europe believes further clarification is still needed regarding:
treatment of imported tires,
mechanisms for grouping due diligence documents,
and practical implementation within the global supply chain.
For natural rubber-producing countries such as Indonesia, these developments are important because the EUDR will significantly affect export market access to the European Union region.
Market Fundamental Outlook
Fundamentally, the natural rubber market still maintains a positive medium-term outlook.
The main supporting factors include:
the ongoing global supply deficit,
stable tire industry demand,
high energy prices,
and weather concerns in major producing countries.
However, short-term volatility is still expected to remain high because the market remains highly sensitive to:
weather developments in Thailand,
Vietnam’s production recovery,
crude oil price movements,
China’s economic conditions,
and global automotive industry demand.
If Thailand’s supply begins to increase significantly during May and June, the market could experience a healthy correction after the long rally since April.
Technical Trading Outlook
Technically, the bullish trend remains intact with a gradual strengthening pattern since early April.
The price increase continues to form higher highs and higher lows, indicating that market momentum remains relatively strong.
Key market levels currently being monitored include:
Strong support: 216.0 – 217.0 US cents/kg
Next support: 212.5 US cents/kg
Nearest resistance: 221.0 – 222.5 US cents/kg
Next psychological resistance: 225.0 US cents/kg
As long as prices remain above the 216–217 US cents/kg support area, the bullish trend is considered to remain dominant.
However, short-term technical indicators are also beginning to show that the market is approaching overbought territory following the sharp rise within a relatively short period.
This condition opens the possibility for profit-taking or limited technical corrections before the market determines its next direction.
Market participants will continue monitoring:
weather developments in Southeast Asia,
China’s consumption data,
crude oil movements,
EUDR implementation developments,
and global economic conditions.
With the combination of these various sentiments, the global natural rubber market is expected to remain volatile but likely stay at elevated levels in the short to medium term.