Global Rubber Prices Plunge Nearly 6% as TSR20 Breaks Below 210 US Cents/kg Amid Massive Sell-Off
Medan, June 25, 2026 – The global natural rubber market came under intense selling pressure on Thursday (June 25), with the July SICOM TSR20 contract on the Singapore Exchange (SGX) falling sharply to 209.6 US cents/kg as of 08:49 WIB (Western Indonesia Time). The contract dropped 13.3 US cents, or approximately 5.97%, from the previous close, marking one of the steepest single-day declines in the first half of 2026.
The downturn was mirrored in China, where the actively traded September RSS3 (RU) contract on the Shanghai Futures Exchange (SHFE) slid to 16,745 yuan/tonne, down 880 yuan, or roughly 5%. The synchronized decline across Asia's two benchmark rubber futures markets suggests that bearish sentiment has spread throughout the global rubber market rather than being driven by localized factors.
Despite the sharp correction, TSR20 has still delivered solid gains so far this year. From 181.7 US cents/kg at the beginning of January, prices climbed steadily to a yearly high of 234.5 US cents/kg in early June. However, momentum began to weaken in mid-June, with prices retreating progressively from 231.6, 228.2, 227.4, 226.3, 227.2, 224.3, and 222.9 US cents/kg, before plunging to 209.6 US cents/kg in Thursday morning's session.
Rising Supply Expectations Meet Weak Tire Demand
The sharp correction reflects the combined impact of several factors that have emerged over recent days.
One of the primary drivers is growing expectations of higher rubber production across Southeast Asia. Market participants anticipate stronger output from Thailand, Vietnam, and Indonesia as weather conditions improve toward the end of June and into July. Although rainfall continues in southern Thailand, production disruptions have proven less severe than previously feared, easing concerns over tight supply.
Demand conditions, meanwhile, remain subdued. Data from China's tire industry indicate that factory utilization rates are still relatively low. Truck tire manufacturers are operating at around 63–65% capacity, while passenger tire producers are running at approximately 68–69%. Although many factories resumed operations following the Dragon Boat Festival holiday, market demand has yet to recover sufficiently, prompting manufacturers to limit production to manage finished goods inventories. Consequently, purchases of natural rubber raw materials remain cautious.
Profit-Taking and Technical Selling Accelerate the Decline
The sell-off has also been fueled by a shift in broader market sentiment.
Between April and early June, rubber prices benefited from concerns over El Niño-related weather risks, supply disruptions, and optimism surrounding global economic growth. Much of that optimism has since faded. After prices repeatedly failed to break above the 235–238 US cents/kg resistance zone, many investors chose to lock in profits. Large-scale profit-taking quickly evolved into broader liquidation across the market.
Additional pressure came from declining butadiene prices, the primary feedstock for synthetic rubber. Lower synthetic rubber production costs have improved the competitiveness of substitute materials, slightly weakening demand prospects for natural rubber.
From a technical perspective, the decline accelerated after prices broke below the key 220 US cents/kg support level, which had served as an important floor for several weeks. The breakdown triggered a wave of automatic stop-loss orders, intensifying selling pressure. Technical indicators, including the MACD, point to rapidly weakening momentum, while prices have fallen below the MA5, MA10, and MA20 moving averages, confirming that bearish momentum currently dominates the short-term outlook.
Physical Market Fundamentals Remain Relatively Stable
Despite the steep decline in futures prices, conditions in the physical rubber market have not deteriorated significantly.
Natural rubber inventories in China continue to trend lower. The latest data indicate that social inventories have declined to approximately 1.245 million tonnes, while stocks at Qingdao Port have also continued to decrease. At the same time, raw material prices in Thailand remain relatively firm, suggesting that production costs for growers have not fallen sharply.
These developments indicate that the latest correction has been driven primarily by changing sentiment in the futures market rather than by a dramatic deterioration in physical supply and demand fundamentals.
For Indonesia's rubber industry—including crumb rubber processors in North Sumatra—the decline is not expected to immediately erode operating margins significantly. In practice, farmgate raw material prices generally adjust downward as export prices weaken. However, if international prices remain depressed over the coming days, downward pressure on local raw rubber (bokar) prices will likely become unavoidable.
Market Outlook Through the End of the Week
For the remainder of the week, market attention will focus on whether prices can hold the 205–208 US cents/kg range, which has now become the nearest technical support zone.
If this support holds, a technical rebound toward 214–218 US cents/kg remains possible, particularly as several momentum indicators are beginning to enter oversold territory.
Conversely, should selling pressure continue and prices decisively break below 205 US cents/kg, the market could extend its correction toward the 198–202 US cents/kg range, representing the next major historical support level.
Although Thursday's sell-off appears dramatic, it does not necessarily signal a deterioration in the underlying fundamentals of the global natural rubber industry. Instead, current price action reflects shifting market sentiment, the liquidation of long positions, and revised expectations regarding seasonal supply. Price movements during the final two trading sessions of the week will likely determine whether this sharp decline proves to be merely a technical correction or the beginning of a more prolonged downward trend.