SICOM TSR20 Turns Volatile as SHFE Rebounds, El Niño Looms Over Global Rubber Market

Medan, May 29, 2026 – The global rubber market heated up once again on Thursday. After posting a sharp rally in the previous session, the benchmark SICOM TSR20 contract for June delivery on the Singapore Exchange (SGX) suddenly corrected to 223.0 US cents/kg, down 5.3 cents. Despite the decline in the front-month contract, deferred contracts remained in positive territory, while the Shanghai Futures Exchange (SHFE) staged a strong rebound, reviving bullish sentiment across the Asian rubber market.

As of 7:05 a.m. WIB, the SICOM TSR20 June contract was quoted at 223.0 US cents/kg (-5.3), while the July and August contracts traded at 227.5 (+0.2) and 226.4 (+0.1), respectively. Meanwhile, the RSS3 September contract on SHFE surged to 17,755 yuan/ton, up 150 yuan.

SHFE Rebounds, Market Sentiment Improves

The strong rally in SHFE became the main focus of market participants.

After several sessions of heavy selling pressure, China's rubber futures market rebounded as investors renewed concerns over the outlook for global rubber supply.

The 150-yuan gain suggests that traders have begun rebuilding long positions following fresh signals that weather-related disruptions in Southeast Asia could still tighten global rubber supplies during the second half of the year.

The rebound in SHFE also helped cushion the decline in SICOM TSR20 after the Singapore market opened sharply lower.

El Niño Concerns Continue to Support Prices

The global rubber market remains caught between bullish expectations and near-term fundamental realities.

On one hand, concerns over El Niño and the aging profile of rubber plantations worldwide continue to raise fears of lower production in the coming years. According to estimates from the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber demand is expected to reach approximately 15.6 million tons in 2026, while production is projected at only 15.2–15.3 million tons.

This anticipated supply deficit keeps the market highly sensitive to any weather-related developments.

On the other hand, actual demand from the global tire and automotive industries has yet to fully recover, leaving the market vulnerable to sharp price swings and elevated volatility.

Thailand's Rainfall Challenges the Bullish Narrative

The strong rally throughout April and early May was largely driven by concerns that an intense El Niño event would significantly reduce rubber production across Thailand and Southeast Asia.

However, weather conditions shifted after southern Thailand experienced heavy rainfall between May 11 and May 25, 2026. Increased precipitation in several key producing regions eased fears of severe drought, weakening one of the primary drivers behind the earlier price surge.

At the same time, the price spread between Thai latex and cup lump narrowed, suggesting that raw material shortages have begun to ease.

Nevertheless, the market remains cautious. Many analysts believe that excessive rainfall during Thailand's wet season could disrupt tapping activities later this year, meaning supply risks have not disappeared entirely.

June Contract Weakens, But the Bullish Trend Remains Intact

The decline in the June contract, while July and August contracts remained positive, reflects significant profit-taking ahead of the June contract's expiration.

Such price behavior is common in commodity futures markets and does not necessarily indicate the end of the broader bullish trend. Many traders view the current pullback as a healthy adjustment before the market determines its next direction.

Historically, SICOM TSR20 has maintained a strong upward trajectory throughout 2026, rising from around 181–185 US cents/kg in early January to a peak of approximately 231.6 US cents/kg by mid-May.

Market Approaches a Critical Technical Zone

From a technical perspective, the 221–223 US cents/kg range has become a key support area.

If prices manage to hold above this zone through the end of the week, another rebound toward 228–231 US cents/kg remains likely.

However, a decisive break below 220 US cents/kg could trigger additional selling pressure, potentially pushing prices toward the 215–217 US cents/kg range.

Meanwhile, strong psychological resistance remains between 230 and 235 US cents/kg, an area that could be revisited if SHFE continues strengthening and fresh weather-related supply concerns emerge across Southeast Asia.

Fundamentals Do Not Yet Support a Major Downturn

Although seasonal harvesting has begun to increase raw material availability, several supportive factors continue to underpin the market.

China's rubber inventories have started to decline, factory restocking activity remains ongoing, Chinese tire exports continue to perform relatively well, and elevated global crude oil prices are supporting synthetic rubber prices.

In addition, market participants are closely monitoring geopolitical tensions in the Gulf of Thailand, which could potentially affect one of the region's key export shipping routes.

New Investment Boosts Long-Term Industry Confidence

Despite recent market volatility, long-term prospects for the global rubber industry remain encouraging.

Liberia has reportedly secured an investment commitment of approximately US$36 million from a Cambodia-based agribusiness group to develop rubber processing facilities and integrate smallholder farmers into the global supply chain.

The investment underscores continued confidence in the strategic importance and long-term growth potential of the global natural rubber industry.

Weekend Outlook: Volatile, Emotional, and Highly Sensitive

For the remainder of the week, the rubber market is expected to remain highly volatile and extremely sensitive to weather developments and broader global sentiment.

Market participants will continue monitoring:

• El Niño developments,

• rainfall across Thailand,

• production trends in Southeast Asia,

• tire demand in China,

• and movements in crude oil prices and the U.S. dollar.

Given this combination of factors, SICOM TSR20 is expected to continue trading within a relatively wide range. The 221–223 US cents/kg area remains a critical support zone, while 228–231 US cents/kg represents the next upside target. Should market sentiment strengthen once again, another attempt to challenge the 230–235 US cents/kg resistance zone cannot be ruled out in the near term.