Global Rubber Prices Remain Under Pressure as Rising Supply Weighs on the Market; SICOM May Test the 205 Cents/kg Level

Medan, July 2, 2026 – Global natural rubber prices continued their corrective trend at the beginning of July 2026. As of 11:15 a.m. WIB (Western Indonesia Time) on Thursday, the SICOM TSR20 August contract was trading at 208.1 U.S. cents per kilogram, down 1.4 cents, while the most-active SHFE RSS3 September contract fell 100 yuan to 16,605 yuan per metric ton. The decline extended the weakness that has persisted since the final week of June, despite a brief technical rebound earlier this week.

Compared with this year's peak of approximately 234.5 U.S. cents/kg in early June, SICOM prices have corrected by more than 11%. Nevertheless, prices remain well above the levels seen at the beginning of January, when they traded around 181–185 U.S. cents/kg, indicating that the current decline represents a market adjustment following a prolonged rally.

Supply Begins to Recover

The primary pressure on the market continues to come from the supply side. As July begins, major producing countries including Thailand, Indonesia, and Vietnam have gradually emerged from the wintering season, allowing latex production to recover. The increase in output across Southeast Asia has strengthened expectations of a more abundant global supply over the coming weeks.

Market analysts noted that raw material prices in Thailand have remained volatile, while prices for processed rubber products have softened slightly. This has improved processing margins and encouraged higher production activity. Meanwhile, Vietnam's combined exports of natural rubber and compound rubber totaled approximately 539,000 metric tons during January–May 2026, down 1.3% from the same period last year. Exports to China also declined by around 3%, although the decrease has not been sufficient to offset the seasonal recovery in regional production.

Demand Yet to Provide Strong Support

On the demand side, the market has yet to receive any meaningful positive catalyst. Tire manufacturing activity in China remains relatively stable but has not shown a significant increase in raw material consumption. Relatively high inventories across parts of the supply chain have also encouraged buyers to adopt a more cautious purchasing strategy.

Additional pressure has come from weaker prices for synthetic rubber (butadiene rubber) on the Shanghai Futures Exchange. As a result, natural rubber has not received additional competitive support, despite crude oil prices remaining at relatively elevated levels.

Supportive Factors Remain Limited

Several factors continue to provide some support for rubber prices. Elevated crude oil prices have increased production costs for synthetic rubber, while the depreciation of the Japanese yen against the U.S. dollar has made Osaka rubber futures more attractive to overseas buyers.

However, these supportive factors have so far been insufficient to offset the bearish sentiment created by rising supplies from major producing countries. Consequently, profit-taking and position adjustments continue to dominate market activity.

Technical Analysis

Disclaimer: The following technical analysis is based on current market price patterns and is intended solely as a market reference. Actual price movements remain subject to changes in fundamental conditions and market sentiment.

Based on SICOM TSR20 price movements throughout the year, the short-term trend continues to indicate a corrective pullback following the strong rally recorded from the beginning of the year through early June.

From a technical perspective, the 208 U.S. cents/kg level is currently serving as an important support area. Should selling pressure continue through the remainder of the week, prices may test the 205–206 U.S. cents/kg range. If this support fails to hold, the market could extend its decline toward approximately 200–202 U.S. cents/kg.

Conversely, any technical rebound is likely to encounter resistance in the 211–214 U.S. cents/kg range, while 216–218 U.S. cents/kg represents the next major resistance zone.

Considering the current fundamental backdrop, the market is expected to remain in a sideways-to-bearish consolidation phase unless a significant new catalyst alters the balance between supply and demand.

Short-Term Outlook

The global rubber market is entering a period in which production across major producing countries is recovering, while demand growth remains modest. This imbalance continues to favor increased supply, keeping downward pressure on prices.

Market participants are expected to closely monitor production developments across Southeast Asia, demand from China's tire manufacturing industry, crude oil price movements, and broader global macroeconomic conditions that may influence commodity consumption.

Conclusion

Trading activity at the beginning of July indicates that global rubber prices remain in a corrective phase following the strong gains recorded during the first half of 2026. Rising supplies from major producing countries continue to be the dominant factor weighing on prices, while demand has yet to provide sufficient momentum to reverse the market's direction.

Unless there is a significant change in market fundamentals, rubber prices are expected to remain in a consolidation phase with a bearish bias over the coming days, with the 205–208 U.S. cents/kg range likely to serve as the key zone determining the market's next direction.

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