Rubber Market Remains Under Pressure at the Start of July as SICOM Holds Above 209 Cents/kg. Will the Technical Rebound Continue?
Medan, July 1, 2026 – The natural rubber market entered July under continued selling pressure, although the pace of the decline has begun to ease. As of 09:44 WIB (Western Indonesian Time), the SICOM TSR20 July contract on the Singapore Exchange (SGX) was trading at 209.7 US cents/kg, down 0.6 cent from the previous close. Meanwhile, the SHFE RSS3 most-active September contract rose to 16,700 yuan/ton, up 45 yuan, reflecting relatively stronger sentiment in China's rubber market.
The divergence between the two markets suggests that investors are still adjusting to changing global fundamentals. SICOM, which more closely reflects the physical natural rubber market, remains under pressure from improving supply conditions, while RSS3 has found support from stronger manufacturing data in China.
June Ended with a Sharp Correction
Throughout June, SICOM TSR20 experienced a significant reversal. After reaching 234.5 cents/kg at the beginning of the month and touching a yearly high near 236.9 cents/kg, the market came under heavy selling pressure, briefly falling to 208.6 cents/kg by the end of June. The correction erased a substantial portion of the gains accumulated during April and May.
This shift indicates that market sentiment has moved away from concerns over tight supply toward expectations of increasing global production.
Supply Improves as the Global Supply Gap Narrows
According to the latest market analysis, major rubber-producing countries in Southeast Asia have now entered their seasonal peak tapping period.
Thailand, the world's largest producer, has seen production improve as weather conditions become more favorable. Vietnam continues to steadily increase output, while African producers—particularly Côte d'Ivoire—are playing an increasingly important role in global natural rubber supply.
Although Indonesia continues to face structural challenges such as aging rubber trees and labor shortages, higher production from other producing countries is expected to offset earlier concerns about supply shortages.
In addition, the Shanghai International Energy Exchange (INE) has officially launched its cross-border delivery mechanism for TSR20 futures. The new system is expected to improve international trading efficiency and further integrate regional rubber markets over the medium term.
Tire Demand Remains Weak
Demand conditions remain relatively soft.
The global tire industry continues to struggle with elevated inventories, causing manufacturers to purchase raw materials only on a need-to-use basis. Production, particularly in the truck and commercial vehicle tire segment, remains under pressure.
The weakness has been reinforced by declining synthetic rubber prices. During June, Styrene Butadiene Rubber (SBR) prices fell by nearly 17%, driven by lower crude oil, butadiene, and styrene prices. Cheaper synthetic rubber has reduced the competitiveness of natural rubber, as manufacturers have access to more affordable alternative raw materials.
China's Manufacturing Recovery Provides Some Optimism
Despite the bearish environment, the market has received encouraging news from China.
China's official Manufacturing Purchasing Managers' Index (PMI) returned above the 50-point threshold in June, signaling renewed expansion in manufacturing activity. If sustained, the recovery could gradually increase industrial demand for raw materials, including natural rubber.
Meanwhile, the continued weakness of the Japanese yen has enhanced Japan's export competitiveness, providing additional support for yen-denominated rubber futures traded on the Osaka Exchange. However, these positive developments have not yet been sufficient to offset the pressure created by rising global supply.
Technical Analysis (Disclaimer)
Disclaimer: The following technical analysis is based solely on chart observations and should not be considered investment advice.
The daily chart continues to indicate a bearish primary trend. Prices remain below the 5-day, 10-day, 20-day, 40-day, and 60-day moving averages, while the MACD remains in negative territory despite signs that downside momentum is gradually weakening.
The latest trading session showed prices briefly declining to 209.0 cents/kg before recovering to 209.7 cents/kg. Trading volume increased, but open interest remained largely unchanged, suggesting that recent activity has mainly been driven by the closing of existing positions rather than the establishment of significant new short positions.
From a technical perspective, this pattern leaves room for a technical rebound, although confirmation of a broader trend reversal has yet to emerge.
Key technical levels for this week include:
First support: 209.0 cents/kg
Major support: 205.3 cents/kg
Initial resistance: 211–212 cents/kg
Next resistance: 215–216 cents/kg
As long as prices remain above 205.3 cents/kg, a recovery toward 213–216 cents/kg remains possible. However, if that support level is broken on stronger trading volume accompanied by rising open interest, further downside toward the 202–200 cents/kg range could develop.
July Outlook
Looking ahead, the rubber market is expected to remain in a consolidation phase with a bearish bias. Global supply is likely to continue increasing as Southeast Asia moves deeper into its peak harvesting season, while demand from the global tire industry has yet to show a meaningful recovery.
Nevertheless, improving manufacturing activity in China, the implementation of INE's cross-border TSR20 delivery mechanism, developments in global tire exports, and weather conditions across major producing countries will remain the key drivers of market direction in the coming weeks.
For now, market participants will closely monitor whether prices can hold the 205–209 cents/kg support zone, which could serve as the foundation for a stronger recovery once clearer reversal signals emerge.