Rubber Prices Correct in Midday Trading After Rally, While the Market Remains Supported by Tightening Global Supply Outlook
Southeast Asia's Production Prospects Weaken, but Soft Demand Continues to Limit Price Gains
Medan, July 21, 2026 – Global natural rubber prices once again displayed significant volatility as trading resumed on Tuesday. After posting solid gains in the previous session, rubber futures on major Asian exchanges moved lower during Tuesday's midday session as investors locked in profits. Although weak demand from the tire industry continues to weigh on prices, medium-term fundamentals remain supportive.
As of 12:40 WIB, the SICOM TSR20 August contract on the Singapore Exchange (SGX) stood at US 213.6 cents/kg, down 4.3 cents from the previous close. Meanwhile, the most-active RSS3 September contract on the Shanghai Futures Exchange (SHFE) declined to 16,735 yuan/ton, down 215 yuan.
The correction followed Monday's strong rally, when prices climbed on optimism that global rubber supplies may tighten further in the coming months due to lower production in several key producing countries.
Looking at the SICOM TSR20 performance throughout 2026, the broader trend remains relatively constructive. Prices fell to a yearly low of around 179.9 cents/kg in January before gradually recovering and reaching a high of 234.5 cents/kg in early June. Although prices experienced a sharp correction to around 208.6 cents/kg at the end of June, they rebounded and settled at 217.9 cents/kg on Monday. Today's decline appears to represent a short-term adjustment rather than a reversal of the overall trend.
Fundamentals Remain Mixed
From the supply side, supportive factors remain in place.
According to data released by the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber production in May 2026 totaled approximately 997,000 metric tons, down 4.7% year-on-year. The decline was mainly attributed to Indonesia, where aging rubber trees and the lingering effects of El Niño-induced dry weather have reduced production.
Thailand has also revised down its 2026 production forecast. However, as the tapping season progresses in July, improved rainfall in southern Thailand has allowed harvesting activities to recover, resulting in a gradual increase in raw material supply. This has become one of the factors contributing to short-term downward pressure on prices.
On the demand side, global consumption has yet to recover meaningfully. The tire manufacturing industry—the largest consumer of natural rubber—remains in its seasonal low-demand period. Most manufacturers continue purchasing raw materials only to meet immediate production requirements rather than rebuilding inventories. High finished-goods inventories also continue to limit stronger demand for natural rubber.
Meanwhile, rubber inventories at Qingdao Port in China have declined for two consecutive weeks. Nevertheless, stock levels remain significantly higher than a year ago, limiting their ability to provide stronger support for prices.
Another factor restraining further gains is the recent easing in crude oil prices. Lower oil prices improve the competitiveness of synthetic rubber, thereby reducing upward pressure on natural rubber prices.
Current Pullback Viewed as Healthy
From a technical perspective, Tuesday's price action appears to be a healthy correction following Monday's rally.
Trading data from the Shanghai Futures Exchange showed that prices rebounded toward a resistance area before retreating as profit-taking emerged. In addition, declining open interest indicates that many market participants closed existing positions after capturing recent gains, suggesting that the previous rally was not yet supported by substantial new buying interest.
This pattern is generally interpreted as a consolidation phase rather than a significant trend reversal.
Market Outlook for Today
Unless fresh fundamental developments emerge before the market closes, rubber prices are expected to trade sideways with a mildly bearish bias. Selling pressure is likely to increase whenever prices approach resistance levels, while buying interest should continue to emerge on dips, supported by expectations of tighter global supply.
Market direction will also remain sensitive to weather developments across Southeast Asia, crude oil prices, the U.S. dollar, and China's economic performance as the world's largest natural rubber consumer.
Technical Outlook (Disclaimer)
Disclaimer: The following technical analysis represents an interpretation of current price patterns and market indicators. It is not investment advice or a recommendation to buy or sell, and future price movements cannot be guaranteed.
Based on the latest chart previously shared, Monday's rally appears to have begun losing momentum. Buying strength weakened after prices approached a key resistance area. Today's correction has also been accompanied by a decline in open interest, suggesting that the weakness is primarily driven by position liquidation rather than the establishment of aggressive new short positions.
As long as SICOM TSR20 remains above the 212–213 cents/kg support zone, the market is likely to continue consolidating. However, should prices break below this area, the next downside target could be around 210–211 cents/kg.
On the upside, the 216–218 cents/kg range remains the nearest resistance zone. A convincing break above this level would be required to open the way toward the 220 cents/kg level.
For today's session, the most likely scenario is sideways trading with a slight downside bias, reflecting profit-taking after Monday's advance. Nevertheless, as long as concerns over tightening global rubber supplies persist and demand does not deteriorate significantly, the medium-term outlook for natural rubber prices remains broadly stable with the potential for gradual appreciation.