Rubber Prices Ease After a Prolonged Rally, SICOM TSR20 Set to Test Key Support This Week
Medan, May 25, 2026 — The global natural rubber market has entered a consolidation phase following a prolonged rally since the beginning of the year. Selling pressure intensified toward the close of last week as supply prospects improved in major producing countries while downstream demand, particularly from China's tire industry, remained subdued.
Last Friday, the benchmark rubber contract on the Osaka Exchange (OSE) for October delivery settled 0.68% lower at 406.3 yen per kilogram. In China, the most actively traded September contract on the Shanghai Futures Exchange (SHFE) fell 1.03% to 17,345 yuan per ton.
Pressure was even more pronounced in the SHFE butadiene rubber contract, which dropped 3.73% to 14,975 yuan per ton amid weakening demand from tire manufacturers and growing concerns over increasing global rubber supplies.
Market analysts believe that current sentiment is being driven primarily by improving weather conditions in Thailand following earlier heavy rainfall, as well as the upcoming peak harvesting season in Côte d'Ivoire, which is expected to begin next week. Historically, global natural rubber production remains relatively low between February and May before increasing significantly during the June–September period.
Beyond supply, demand continues to weigh on market sentiment. Several Chinese tire manufacturers are expected to reduce production rates as profit margins remain under pressure due to elevated raw material costs and weak export demand, particularly from the Middle East.
Monday Morning Trading
As of 7:00 a.m. WIB on Monday (May 25), Asian rubber markets were trading mixed.
The SICOM TSR20 June contract on the Singapore Exchange (SGX) was quoted at 220.9 US cents/kg, down approximately 0.9 cent from the previous session. Meanwhile, the SHFE RSS3 September contract edged higher to 17,430 yuan per ton.
The mixed performance suggests that market participants remain cautious while waiting for a clearer directional signal following the heightened volatility experienced throughout May.
Strong Rally Since the Beginning of the Year
Despite the recent correction, SICOM TSR20 has still delivered an impressive performance in 2026.
According to year-to-date trading data, the contract climbed from 181.7 US cents/kg in early January to a high of 231.6 US cents/kg on May 13, before experiencing profit-taking over the past several trading sessions.
The rally was driven by several key factors, including:
production disruptions caused by wet weather across Southeast Asia during the first quarter,
concerns over tightening global supply,
stronger crude oil prices, and
speculative buying by investment funds in commodity markets.
However, as May draws to a close, market attention has gradually shifted from supply shortages toward expectations of increased seasonal production.
Indonesia Focuses on Improving Smallholder Productivity
Amid global market fluctuations, the Indonesian government is placing greater emphasis on strengthening its smallholder rubber sector.
Deputy Minister of Transmigration Viva Yoga Mauladi announced that the government is preparing measures to improve farmer productivity through agricultural modernization, replanting programs, and the possibility of fertilizer subsidies for rubber plantations.
According to government estimates, approximately 2.1 million households depend on the rubber industry, particularly across Sumatra and Kalimantan. One of the industry's biggest challenges remains low productivity, as many plantations consist of aging rubber trees that are more than 25 years old.
In addition to replanting initiatives, the government is also encouraging intercropping systems to help increase farmers' incomes, particularly in transmigration areas.
Technical Analysis: Market May Test the 218–220 US Cents Zone
From a technical perspective, the recent decline in SICOM TSR20 continues to be viewed as a normal consolidation following the strong rally recorded throughout April and mid-May.
The 220 US cents/kg level has become the market's primary short-term psychological support. If selling pressure persists, the market could test several important levels:
218–219 US cents/kg as initial support,
214–216 US cents/kg as medium-term support,
and 210–212 US cents/kg as the next major support zone.
On the upside, short-term resistance is expected at:
223–225 US cents/kg, followed by
stronger resistance around 228–232 US cents/kg.
As long as prices remain above 214–216 US cents/kg, the medium-term bullish structure is generally expected to remain intact.
Fundamentals Remain Mixed This Week
The rubber market is expected to remain volatile this week as bearish and bullish factors continue to offset each other.
Bearish factors include:
increasing seasonal production,
persistently weak global tire demand, and
concerns over slowing manufacturing activity in China.
Meanwhile, supportive factors include:
relatively high crude oil prices,
global inventories that remain below surplus levels, and
supportive government policies in several major producing countries.
Market participants will also closely monitor geopolitical developments, movements in the Chinese yuan, and Asian manufacturing data, all of which could influence commodity prices in the coming days.
For now, the global rubber market is expected to remain in a consolidation phase while awaiting a clearer supply-demand balance heading into the third quarter of 2026.