TSR20 Extends Two-Day Rebound, Is the Market Finding a New Support Base? Industry Players Await the Next Direction

Medan, August 7, 2026 – The natural rubber market continued to show signs of recovery on Friday (August 7), with futures extending their rebound during the morning trading session. After posting gains on Thursday, the market has now recorded two consecutive days of recovery, raising hopes that the selling pressure seen at the beginning of August is beginning to ease. However, market participants remain cautious as several fundamental factors have yet to show a meaningful improvement.

The latest price gains appear to be driven more by improving market sentiment and technical recovery than by a major shift in market fundamentals. While confidence has improved, investors continue to closely monitor both supply and demand developments before establishing stronger positions.

Regional Markets Provide Positive Support

Rubber futures in Shanghai continued to strengthen after the benchmark contract gained around 150 yuan per tonne in the previous session. Both the NR contract and butadiene rubber futures also recorded solid advances. Meanwhile, Japan's Osaka Exchange (OSE) rubber futures moved higher as crude oil prices recovered.

Higher crude oil prices generally provide support for natural rubber because they increase the production cost of synthetic rubber, improving the competitiveness of natural rubber. Renewed geopolitical tensions in the Middle East, which have raised concerns over global energy supplies, also contributed to stronger commodity prices.

In China's physical market, particularly in Qingdao, traders raised their offers by approximately 200–300 yuan per tonne following the rally in Shanghai futures. Although downstream buying interest remained relatively moderate, the higher futures prices helped maintain firm sentiment in the spot market.

Declining Inventories Continue to Support Prices

On the fundamental side, one of the key supportive factors remains the continued decline in China's natural rubber inventories.

As of August 2, 2026, China's total social inventory of natural rubber fell to approximately 1.169 million tonnes, down by about 22,000 tonnes from the previous week. Inventories declined across both TSR and RSS categories, including stocks held in Qingdao, the country's largest rubber trading hub.

The inventory drawdown suggests that market consumption remains active and that excessive oversupply has yet to emerge. For industry participants, this continues to provide an important cushion against a sharper decline in prices.

Peak Production Season Still Limits Upside

Despite the improving sentiment, upside potential remains constrained by seasonal supply conditions.

August marks the traditional peak production season across Southeast Asia. While intermittent rainfall continues to disrupt tapping activities in parts of Thailand, weather conditions have generally improved compared with previous months, gradually reducing supply-related risks.

As a result, fresh rubber output entering the global market is expected to increase over the coming weeks.

Demand Recovery Remains the Biggest Challenge

On the demand side, the tyre manufacturing industry continues to face headwinds.

Several Chinese tyre manufacturers are still undergoing scheduled maintenance, keeping operating rates below normal levels. In addition, China's passenger vehicle sales in July declined from both the previous year and the previous month, indicating that consumer demand has yet to recover convincingly.

In export markets, U.S. tyre imports from China fell significantly during the first half of the year. However, part of that demand has shifted to other producing countries, particularly Thailand, helping maintain relatively stable demand for Southeast Asian natural rubber.

Market Balance Remains Relatively Stable

Despite increasing seasonal production, many analysts believe that the global natural rubber market remains broadly balanced.

No significant supply surplus has emerged, while falling inventories indicate that consumption continues to absorb a meaningful portion of new production. Consequently, recent price movements appear to reflect changes in market expectations rather than a major deterioration in underlying fundamentals.

Unless unexpected events such as a severe global economic slowdown or major trade policy changes occur, rubber prices are expected to remain within a consolidation phase.

Market Outlook for Today

Considering both technical and fundamental factors, Friday's trading session is expected to maintain a constructive tone, although upside momentum may remain limited.

The two-day rebound suggests that buying interest has gradually returned following the sharp sell-off earlier this week. Nevertheless, relatively weak downstream demand is likely to encourage investors to remain selective.

Under these conditions, the most likely scenario for today's trading is a sideways-to-slightly bullish market. Should positive sentiment across regional exchanges persist throughout the session, prices may be able to hold onto recent gains. However, profit-taking after two consecutive days of recovery could generate higher intraday volatility.

Technical Outlook

Disclaimer: Technical analysis is based on historical price patterns and market indicators. It represents an analytical opinion rather than a guarantee of future price movements.

Recent trading indicates that selling pressure has started to ease, with the market attempting to establish a new equilibrium following the recent correction. Momentum has improved, but it is not yet strong enough to confirm the beginning of a sustained uptrend.

For SICOM TSR20, provided that global sentiment remains broadly unchanged, prices are expected to trade within the 218–221 US cents/kg range during today's session. A successful close above this zone could pave the way for another test of the 222–224 US cents/kg resistance area over the coming sessions. On the downside, renewed selling pressure could push prices back toward the 216–217 US cents/kg support zone.

Overall, the two-day rebound represents an encouraging development after the sharp correction earlier this week. Nevertheless, until stronger evidence of improving demand emerges, the market is likely to remain in a consolidation phase with a gradual upward bias rather than entering a rapid and sustained rally.