Rubber Prices Ease at the Start of August, Can They Stay Above 210? Market Awaits Fresh Direction Amid Supply Pressure
Medan, August 3, 2026 – The natural rubber market began August on a more cautious note. After ending last week with a strong rally, the SICOM TSR20 September contract, monitored at 3:00 PM WIB today, stood at 210.8, down 0.7 points from the previous close. Meanwhile, the SHFE RSS3 (RU) September contract also came under pressure, falling 165 points to 16,295 yuan per tonne.
This correction was not entirely unexpected. The sharp rebound recorded at the end of last week created room for profit-taking, as market participants reassessed fundamentals that continue to reflect a balance between increasing supply and relatively weak demand.
Weekly Review: A Sharp Rebound Before the Weekend
Rubber prices experienced considerable volatility over the past week. After trading around the 217–218 range, SICOM TSR20 declined to 213.5 on July 29 before recovering to 216.3 on July 30. Strong buying momentum emerged on Friday (July 31), pushing prices sharply higher to 224.4, marking the highest closing level in several weeks.
The rally suggested that buying interest remained intact whenever prices reached attractive levels. However, such a rapid advance also increased the likelihood of a technical correction at the beginning of the new trading week, as reflected in today's market performance.
Even so, compared with late June, when prices briefly fell to around 208–209, the current level still indicates that the market has managed to preserve its short-term recovery.
Today's Afternoon Pullback Appears Healthy
This afternoon's trading suggests that selling pressure has mainly been driven by profit-taking rather than any significant deterioration in market fundamentals.
The 0.7-point decline in TSR20 remains relatively modest, while the sharper decline in SHFE RSS3 indicates that sentiment in the Chinese market remains more cautious than in the international market.
Unless heavier selling pressure emerges during the remainder of the session, today's movement is more consistent with a period of consolidation than the beginning of a new downtrend.
As a result, the market is likely to remain sideways with a slightly weaker bias through today's close. However, if selling pressure intensifies, the important psychological support level around 210 could be tested again.
Fundamentals: Rising Supply Meets Soft Demand
Fundamentally, the market continues to face the challenge of increasing supply from Southeast Asia's major producing countries.
August marks the traditional peak production season across much of Southeast Asia, leading to greater volumes of fresh latex entering processing facilities. Consequently, market participants expect inventories at major trading hubs, including Qingdao Port, to face renewed accumulation pressure unless demand improves.
On the demand side, the global tire industry has yet to demonstrate a convincing recovery. Several Chinese tire manufacturers continue to operate at lower production rates due to elevated production costs and relatively weak vehicle demand. Industry data show that average operating rates at both passenger tire and truck tire factories declined during July compared with the previous month.
As a result, natural rubber consumption remains moderate and has not been strong enough to fully absorb the seasonal increase in supply.
El Niño Remains a Key Balancing Factor
Despite the current supply pressure, market participants continue to closely monitor global weather developments.
Climate monitoring indicates that the probability of a strong El Niño event has increased. Historically, the greatest impact of El Niño on agricultural commodities, including natural rubber, typically emerges several months after the event develops because ocean-atmosphere interactions affect production with a significant time lag.
Therefore, although production is currently benefiting from seasonal harvesting, traders remain cautious about aggressive selling, as future weather-related supply disruptions cannot be ruled out if El Niño develops as projected.
This is one of the key reasons why the recent decline in rubber prices has remained relatively limited.
Inventories Continue to Be Closely Watched
Latest market data indicate that exchange-certified rubber inventories remain relatively high, while synthetic rubber inventories have yet to show a meaningful decline.
As long as inventories remain elevated, the upside potential for prices is likely to remain constrained. On the other hand, if industrial activity strengthens again after seasonal maintenance concludes, the supply-demand balance could gradually become more supportive.
Technical Outlook (Disclaimer)
Disclaimer: The following technical assessment reflects historical price behavior and should not be interpreted as investment advice or a guarantee of future market performance.
Based on the latest price chart, last week's sharp rally toward 224.4, followed by today's correction, suggests that the market is currently testing the strength of that recovery.
As long as prices remain above the 210 area, the short-term recovery structure can still be considered intact. The 210–212 range has become an important support zone that is likely to be closely monitored by traders. If prices hold above this area through today's close, further consolidation would remain the most likely scenario.
For today's session, the key levels to watch are:
Support: 210–211
Resistance: 214–216
Should selling pressure ease, prices may finish the session in a sideways trading pattern above 210. However, if support is decisively broken on stronger selling volume, a short-term decline toward the 208–209 range cannot be ruled out.
Short-Term Outlook
Overall, the natural rubber market enters August amid a tug-of-war between seasonally rising supply and still-fragile demand from the tire industry. At the same time, growing concerns over the potential development of a strong El Niño continue to limit the downside by raising uncertainty over future production.
Taken together, these factors suggest that natural rubber prices are likely to remain in a phase of consolidation with a mildly bearish bias until stronger market catalysts emerge, whether from improvements in global economic conditions, stronger industrial demand, or significant weather developments across major producing regions.