Rubber Prices Rebound, Break Above July Highs! Thailand Weather and Crude Oil Support Rally, Will the Uptrend Continue?

Medan, August 20, 2026 – The natural rubber market extended its gains on Thursday (August 20), maintaining positive momentum after breaking above its July highs. Although the pace of the rally has become more measured, prices continue to be supported by a combination of favorable fundamentals, including weather-related tapping disruptions in Thailand, declining inventories, stronger synthetic rubber prices, and higher crude oil prices.

As of 2:02 p.m. WIB (0702 GMT), the SICOM TSR20 September contract was trading at 230.3 US cents/kg, up 2.1 cents from the previous close. Meanwhile, the Shanghai Futures Exchange (SHFE) January 2027 contract rose 275 yuan to 18,440 yuan per metric ton, reinforcing the positive sentiment across the Asian rubber market.

The latest advance extends the rebound seen over the past several trading sessions. On Wednesday (August 19), rubber prices also closed higher, supported by rising raw material prices in Thailand, stronger synthetic rubber prices, and improving sentiment across the broader commodity market. In China's Qingdao spot market, natural rubber prices increased by 100–200 yuan per metric ton, reflecting resilient demand despite relatively tight supply conditions.

Fundamentals Continue to Support Prices

On the supply side, Thailand's rainy season remains one of the market's primary concerns. Heavy rainfall between August 18 and 21 has disrupted tapping operations in several major producing regions. While the weather has not yet caused a significant supply shortage, it has been sufficient to keep raw material prices elevated.

Field latex prices in Thailand increased to around 75 baht/kg, while cup lump prices also moved higher, indicating that upstream supply remains relatively tight and continues to support both futures and spot prices.

China's inventory situation also remains supportive. As of August 16, 2026, the country's total natural rubber social inventory stood at approximately 1.1537 million metric tons, slightly lower than the previous week. Continued inventory drawdowns in Qingdao suggest that physical supply remains relatively tight despite only moderate purchasing activity from tire manufacturers.

In addition, several Chinese research institutions reported that inventories at some upstream processing plants remain at relatively low levels. This could encourage restocking activity in the coming weeks, providing another source of support for prices.

Demand Still Requires Close Monitoring

On the demand side, higher prices have prompted many tire manufacturers to adopt a more cautious purchasing strategy, waiting for greater price stability before increasing procurement.

Trade data showed that China's exports of new pneumatic rubber tires reached approximately 790,000 metric tons in July 2026, down 10.2% from both the previous month and the same period last year. This suggests that the recovery in global downstream demand remains uneven.

Nevertheless, the softer demand has not been sufficient to reverse market sentiment, as inventories continue to decline even with relatively moderate purchasing activity from the tire industry.

Crude Oil and Geopolitics Provide Additional Support

External factors have also strengthened sentiment in the rubber market.

Global crude oil prices have continued to rise over the past several sessions as investors monitor geopolitical developments in the Middle East, particularly concerns surrounding shipping through the Strait of Hormuz. Higher oil prices increase production costs for synthetic rubber, which is manufactured from petrochemical feedstocks.

As a result, prices of butadiene rubber in China have continued to climb, extending their winning streak to seven consecutive trading sessions. Since synthetic rubber is the primary substitute for natural rubber, its strength has improved the competitiveness of natural rubber and provided additional price support.

Market Focus Shifts to Weather

Having successfully broken above its July highs, the natural rubber market has entered a new phase. Many analysts believe the previous rally was largely driven by valuation recovery following inventory drawdowns. Going forward, further gains will likely depend on the emergence of fresh bullish catalysts.

Weather developments across Southeast Asia remain the market's primary focus. If prolonged rainfall or El Niño-related disruptions significantly affect production in key producing countries, prices could receive additional support. Conversely, if weather conditions improve and production normalizes, upside potential may become more limited.

Outlook for Today's Trading

Market sentiment remains generally constructive for Thursday's trading session. Strength in the SICOM TSR20 contract, firmer Thai raw material prices, continued gains in synthetic rubber, and resilient crude oil prices all suggest that bullish momentum remains intact.

However, further gains are expected to be more gradual, as much of the recent positive news has already been priced into the market.

Technical Analysis Disclaimer: The following technical assessment is provided for informational purposes only and should not be considered investment advice. As long as the SICOM TSR20 September contract remains above the 228.0–229.0 US cents/kg support zone, prices could continue testing the 231.5–233.0 US cents/kg resistance area. If buying momentum strengthens further and supportive fundamentals persist, the market may extend its rally toward 235.0 US cents/kg. On the downside, should profit-taking emerge, the 225.0–226.0 US cents/kg range is expected to provide the nearest support.

Overall, the combination of relatively tight supply, declining inventories, weather-related disruptions in Thailand, stronger crude oil prices, and continued gains in synthetic rubber suggests that the near-term outlook for natural rubber remains constructive, with prices likely to trade in a bullish consolidation pattern. Nevertheless, market participants should continue monitoring weather conditions in major producing countries, crude oil price movements, and global tire demand, as these factors will remain the key drivers of price direction in the coming weeks.