After a Sharp Rally, Rubber Prices Ease in Morning Trade. Can They Hold Above 216 Cents?
Medan, August 5, 2026 – The strong rally in rubber prices seen on Tuesday (Aug. 4) failed to extend into Wednesday morning's trading session. After surging sharply a day earlier, the SICOM TSR20 September contract edged lower, reflecting profit-taking by investors amid concerns over rising supply from major producing countries.
Rubber Prices Pull Back as Investors Lock in Profits
As of 9:15 a.m. WIB, the SICOM TSR20 September contract on the Singapore Exchange (SGX) stood at 216.1 US cents per kilogram, down 0.8 cent, while the most-active September RSS3 contract on the Shanghai Futures Exchange (SHFE) climbed 120 yuan to 16,710 yuan per metric ton. The mixed performance across the two key exchanges suggests that market participants are still searching for a clear direction following Tuesday's strong rally.
The decline in SICOM prices remains relatively modest. After Tuesday's significant gains, some traders opted to lock in profits, triggering a mild correction in early trading. However, the selling pressure has yet to signal a broader trend reversal.
Looking at the year-to-date performance, TSR20 prices remain at relatively firm levels. From around 181.7 US cents/kg in early January, prices climbed to 234.5 US cents/kg in early June, before retreating to nearly 211 cents in early August and subsequently recovering. As a result, the current level of 216.1 US cents/kg still reflects a market trading above its average range over the past several months.
Fundamentals Remain Mixed
From a fundamental perspective, the market continues to face opposing forces.
On one hand, August marks the traditional peak production season across most natural rubber-producing countries in Southeast Asia. Latex output is increasing, leading to greater raw material availability for processing plants. This is expected to place additional pressure on inventories, including at major ports such as Qingdao, China.
Meanwhile, downstream demand, particularly from China's tire manufacturing sector, has yet to fully recover. Some tire producers are still undergoing seasonal maintenance, while concerns over slowing economic growth in China continue to weigh on demand for raw materials. These factors are limiting the market's upside potential.
On the other hand, crude oil prices have recently strengthened. Higher oil prices generally support natural rubber by increasing the production cost of synthetic rubber, thereby improving the competitiveness of natural rubber.
Market participants are also closely monitoring weather developments across key producing regions. Any adverse weather conditions that disrupt tapping activities could restrict supply growth and help cushion further price declines.
Sideways Movement Appears Most Likely
Considering the combination of these factors, the market is most likely to trade sideways with a slightly weaker bias during today's session.
This morning's decline appears to be more of a healthy correction following the previous rally rather than the beginning of a new bearish trend. Unless stronger negative catalysts emerge—such as a sharp deterioration in demand or a larger-than-expected increase in supply—prices are expected to remain within a relatively narrow trading range.
The continued strength in Shanghai's RSS3 contract also suggests that buying interest has not disappeared. This indicates that some market participants still see room for further gains should fresh positive catalysts emerge, particularly from weather-related supply disruptions or improving downstream demand.
Technical Outlook: Consolidation Still Dominates
From a technical perspective, the recent upward momentum has not yet shifted into a confirmed downtrend. The morning pullback continues to resemble a normal consolidation phase following Tuesday's sharp rally.
Disclaimer: The following technical analysis is intended solely as a market reference and should not be considered a guarantee of future price movements or investment advice.
As long as prices remain above the 215 US cents/kg level, the market still has the potential to retest the 217–218 US cents/kg range. Conversely, if selling pressure intensifies, the 214.5–215 US cents/kg area is expected to serve as the first key support zone.
Overall, the short-term outlook continues to point toward a consolidation phase. This morning's correction has not been strong enough to erase the positive sentiment established by Tuesday's rally. However, seasonal supply growth and still-soft downstream demand are likely to limit further gains until stronger fundamental catalysts emerge.