Rubber Rebound Continues, Further Upside Potential Remains This Week

Medan, July 7, 2026 – The global natural rubber market continued to show encouraging signs on Tuesday (July 7), extending the rebound seen in the previous trading session. Rubber prices edged higher in early trading, reinforcing expectations that the market is entering a recovery phase. Nevertheless, industry participants remain cautious, as seasonal supply increases and still-soft downstream demand continue to shape the market outlook.

As of 8:30 a.m. WIB, the SICOM TSR20 August contract on the Singapore Exchange (SGX) stood at 214.4 US cents/kg, up 0.5 cent from the previous session. Meanwhile, the Shanghai Futures Exchange (SHFE) September rubber contract (RU2609) was trading at 16,920 yuan per metric ton, unchanged from the previous close.

The latest price movement indicates that positive market sentiment remains intact, although investors continue to adopt a cautious approach while awaiting further developments in both supply and demand fundamentals.

Monday's Rebound Revived Market Confidence

Monday's trading marked an important turning point for the rubber market. The benchmark RU2609 contract on the Shanghai Futures Exchange (SHFE) closed approximately 1.2% higher at 16,910 yuan per metric ton, while rubber futures on the Osaka Exchange (OSE) surged by more than 2%.

The gains were primarily driven by short covering, as traders closed bearish positions following the sharp decline seen over recent weeks. At the same time, bargain hunting emerged as investors viewed recent price levels as attractive, providing additional momentum to the recovery.

According to Reuters, market sentiment also benefited from an export restriction imposed by a major African rubber-producing country, raising expectations of tighter global supply. While the overall impact on global fundamentals remains limited for now, the development has contributed to improved market confidence.

Despite the rebound, many analysts believe the recent rally still represents a technical recovery rather than the beginning of a sustained bullish trend. Additional confirmation from upcoming trading sessions will be necessary.

Fundamentals Remain Mixed

Behind the improving market sentiment, supply and demand fundamentals continue to present a mixed picture.

On the supply side, Southeast Asia has entered its seasonal peak production period, suggesting that natural rubber output is likely to increase gradually throughout the third quarter. In Thailand, raw material prices have begun to soften, reflecting improving supply conditions.

However, production growth has not accelerated as quickly as expected. Persistent rainfall across major producing regions, including Indonesia, Thailand, and parts of China, continues to disrupt tapping activities, slowing the pace of output expansion.

Meanwhile, rubber inventories at Qingdao Port in China remain relatively high. Nevertheless, inventory accumulation has begun to slow, reducing downward pressure compared with conditions seen in late June.

Demand Recovery Remains Uneven

On the demand side, the global tire industry is still experiencing its traditional seasonal slowdown.

Several Chinese tire manufacturers have reduced operating rates or scheduled maintenance due to weaker export orders. As a result, purchases of natural rubber remain largely demand-driven, with manufacturers maintaining just-in-time procurement strategies rather than building inventories.

However, replacement demand from the commercial vehicle segment continues to provide underlying support, helping prevent a more significant decline in overall rubber consumption.

2026 Price Trend Remains Constructive

Looking at the broader performance of SICOM TSR20 throughout 2026, the medium-term trend remains constructive.

Prices climbed from approximately 181.7 US cents/kg in early January to a yearly high of 234.5 US cents/kg in early June before correcting sharply to around 208–210 US cents/kg toward the end of June.

Current prices have recovered to around 214 US cents/kg, indicating that a significant portion of the previous decline has already been reversed. Although short-term volatility remains elevated, prices continue to trade well above their levels at the beginning of the year.

Outlook for Today's Trading

Market activity is expected to remain cautiously positive.

The continued rise in SICOM TSR20 suggests buying interest remains intact following Monday's rebound. Meanwhile, the stability of the SHFE RU2609 contract indicates that traders are waiting for stronger confirmation before increasing long positions.

Provided no new negative developments emerge—either from the global macroeconomic environment or from a faster-than-expected increase in supply—the current recovery trend is expected to remain supported.

Technical Analysis (Disclaimer)

Disclaimer: The following technical assessment is based solely on market price behavior and should not be interpreted as investment or trading advice.

Technically, the recent rebound has begun to establish a healthier recovery structure. As long as SICOM TSR20 remains above the 213–214 US cents/kg area, prices could continue advancing toward the 216–220 US cents/kg range during this week.

Should buying momentum strengthen further and fundamental conditions continue to improve, the next upside target would be 223–225 US cents/kg, although reaching this level may require additional positive catalysts.

For SHFE RU2609, the 16,850–16,900 yuan per metric ton area is expected to serve as key near-term support. Holding above this zone could allow prices to challenge the 17,100–17,200 yuan per metric ton resistance range later this week.

Conversely, a break below the support zone may trigger another period of sideways consolidation before the market establishes a clearer direction.

Conclusion

The beginning of the week has shown encouraging signs that selling pressure is easing. The continued strength of SICOM TSR20 on Tuesday morning reinforces expectations that the ongoing rebound remains intact, while the stable performance of SHFE RU2609 reflects a market that is cautiously awaiting stronger confirmation.

From a fundamental perspective, the market continues to balance seasonal production increases against weather-related disruptions in major producing regions, while demand from the global tire industry has yet to recover fully. As a result, further price appreciation remains possible in the short term, although gains are expected to be gradual and will continue to depend on weather conditions, inventory trends, and downstream demand in the days ahead.