SICOM TSR20 Surges to 231.9 US Cents/kg as Prolonged El Niño and Supply Shortages Heat Up the Global Rubber Market
Medan, June 2, 2026 – The global natural rubber market posted another strong gain at the start of the week. As of 07:25 WIB (Western Indonesia Time), the July SICOM TSR20 contract on the Singapore Exchange (SGX) was trading at 231.9 US cents/kg, up 2.6 US cents from the previous session.
At the same time, the most actively traded September RSS3 contract on the Shanghai Futures Exchange (SHFE) was quoted at 17,965 yuan per tonne, indicating that positive sentiment continues to dominate the Asian rubber market.
Rubber Rally Continues to Strengthen
SICOM TSR20 has maintained an impressive upward trajectory throughout 2026. Prices have climbed from around 181.7 US cents/kg at the beginning of January to above 231 US cents/kg, representing a gain of approximately 27% year-to-date.
The rally has accelerated over the past week:
May 22, 2026: 221.8 US cents/kg
May 25, 2026: 223.1 US cents/kg
May 26, 2026: 222.1 US cents/kg
May 28, 2026: 228.3 US cents/kg
May 29, 2026: 229.0 US cents/kg
June 2, 2026: 231.9 US cents/kg
The rapid advance reflects a combination of technical momentum and increasingly supportive market fundamentals.
Prolonged El Niño Becomes the Main Driver of Higher Prices
Market analysts believe that the prolonged effects of El Niño have become the dominant factor disrupting the global natural rubber supply chain.
Major producing countries—including Thailand, Indonesia, Vietnam, and Malaysia—have experienced significantly below-normal rainfall throughout 2025 and into 2026. These conditions have delayed the tapping season and sharply reduced latex production.
Beyond adverse weather, the industry is also facing several structural challenges, including:
Aging rubber trees;
Limited new planting;
Continued conversion of rubber plantations to oil palm and horticultural crops; and
Low elasticity in global rubber supply.
International market reports estimate that the global natural rubber market could face a supply deficit of approximately 400,000 tonnes in 2026.
The situation has been further exacerbated by declining inventories, particularly at Qingdao warehouses and the Shanghai rubber exchange, resulting in an increasingly tight spot market.
Demand Continues to Support the Market
On the demand side, the recovery of the global automotive industry has provided additional support for natural rubber prices.
The continued growth of the electric vehicle (EV) market has also increased rubber consumption, as EVs generally require tires with higher performance specifications than conventional vehicles.
In addition, replacement demand for truck tires and ongoing infrastructure projects across several Asian economies continue to support demand for radial tires.
Nevertheless, many tire manufacturers remain under pressure from elevated raw material costs and high import expenses.
Middle East Geopolitical Risks Add to Market Volatility
The market is also closely monitoring developments in the Middle East, where geopolitical tensions have recently contributed to higher global crude oil prices.
Higher crude oil prices generally support natural rubber because petroleum-based synthetic rubber becomes more expensive to produce, improving the competitiveness of natural rubber.
Traders in Singapore describe the current market as one characterized by "strong support with volatile consolidation," where selling pressure remains relatively limited because concerns over global supply shortages have yet to ease.
Technical Analysis: Market Could Test 235–240 US Cents/kg
From a technical perspective, SICOM TSR20 continues to maintain a solid medium-term bullish trend.
The 228–229 US cents/kg range, which previously acted as resistance, has now become a new support zone following the recent breakout.
The strong upward momentum increases the likelihood of the market testing the next key psychological resistance levels at:
235 US cents/kg;
238 US cents/kg; and
Potentially 240 US cents/kg if supply concerns continue to dominate market sentiment.
However, the market could also experience short-term profit-taking after the sharp rally of the past two weeks.
On the downside, key support levels are expected at:
228 US cents/kg;
223 US cents/kg; and
220 US cents/kg.
As long as prices remain above these levels, the primary trend is expected to remain bullish.
Fundamentals Continue to Favor the Bulls
From a fundamental standpoint, the global rubber market continues to be supported by several powerful long-term themes:
A prolonged global supply deficit;
The continuing impact of El Niño;
Low global inventories;
Slow recovery in plantation production; and
Improving demand from the global automotive sector.
This combination of factors has led many analysts to believe that elevated price levels are likely to persist over the coming months, although market volatility is also expected to increase.
Market participants are now closely watching weather developments across Southeast Asia during the peak mid-year production season, as these conditions are expected to play a decisive role in determining the next direction of global rubber prices.