Rubber Prices Open the Week Higher as Tight Supply Offsets Weak Demand; Market Awaits “Golden September” Momentum
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Medan, August 31, 2026 – Global natural rubber prices started the week on a firmer note, supported by tight raw material supplies caused by adverse weather across key producing regions. However, sluggish demand from the tire industry continues to limit further gains, keeping the market in a relatively narrow trading range.
As of 4:40 p.m. WIB, the September SICOM TSR20 contract was quoted at US 241.9 cents per kilogram, up 1.5 cents from the previous close. Meanwhile, the January 2027 RU contract on the Shanghai Futures Exchange (SHFE) rose 155 yuan, or about 0.82%, to 18,965 yuan per tonne, reflecting the positive sentiment still prevailing in the market.
Market participants believe trading remains driven by a tug-of-war between constrained supply and subdued downstream demand, resulting in a gradual upward trend rather than a strong rally.
Positive Start to the Week
Rubber prices continued to strengthen compared with the previous week.
SICOM TSR20 data show prices rising from around US 236 cents/kg on August 24 to 240.4 cents/kg at the close on August 28. On Monday (August 31), prices advanced further to 241.9 cents/kg, marking one of the highest levels recorded in August.
The steady gains indicate that market sentiment remains constructive, although price appreciation continues to be driven primarily by supply-side concerns rather than stronger consumption.
Supply Remains Constrained
Supply-side factors continue to provide the main support for prices.
Although Southeast Asia has entered its traditional peak tapping season, production has failed to increase as expected due to persistent rainfall in Thailand, Vietnam, and parts of Malaysia, which continues to disrupt tapping operations.
Thailand's Meteorological Department has forecast heavy rainfall across much of the country, while weather conditions and haze in Malaysia are also expected to affect production activities ahead of the country's National Day celebrations.
A similar situation is unfolding in China, where the key rubber-producing provinces of Yunnan and Hainan continue to experience frequent rainfall, limiting fresh latex production. As a result, processing plants are competing aggressively for raw materials, keeping Thai cup lump prices elevated at around 67–70 baht per kilogram.
In addition, Thailand's natural rubber exports to China during the first seven months of the year remained below the level recorded a year earlier, limiting additional overseas supply.
Market participants are also closely monitoring the potential impact of El Niño on production in the coming months. Although its full effects have yet to materialize, expectations of weather-related production losses continue to underpin market sentiment.
Inventories Continue to Decline
Market fundamentals have also been supported by falling inventories.
As of August 23, 2026, total natural rubber inventories in Qingdao, China, stood at approximately 631,500 tonnes, down 10,600 tonnes, or 1.65%, from the previous week.
The decline was recorded in both bonded and general trade warehouses. Nevertheless, overall inventory levels remain adequate and do not yet indicate a supply shortage.
Demand Has Yet to Recover
On the demand side, conditions remain relatively weak.
The tire industry, the world's largest consumer of natural rubber, is still in its seasonal low-demand period.
Latest data show that operating rates at China's truck tire (full-steel tire) manufacturers reached approximately 62.33%, slightly higher than the previous week. In contrast, passenger car tire (semi-steel tire) plants operated at around 65.38%, remaining well below the level recorded a year earlier.
Most tire manufacturers continue to purchase raw materials only to meet immediate production requirements. Elevated raw material prices have discouraged companies from rebuilding inventories aggressively.
Market participants are now looking ahead to the traditional "Golden September, Silver October" period, which typically brings stronger manufacturing and automotive activity in China. However, as of the end of August, no meaningful improvement in end-user orders has yet emerged.
Rubber Prices Rose Nearly 8% in August
China's spot natural rubber prices increased by approximately 7.9% throughout August compared with the beginning of the month.
The rally was driven by tighter raw material supplies, continued inventory drawdowns, and growing concerns over weather-related production disruptions. However, every price increase has been met with slower downstream purchasing activity, preventing a stronger breakout.
Fundamentals Continue to Support Prices
Several research institutions believe the market's underlying fundamentals remain constructive.
Analysts at Everbright Futures said adverse weather in major producing countries and elevated raw material prices continue to support the market. However, they cautioned that once rainfall subsides and production increases, additional supply could cap further price gains.
Meanwhile, Natural Rubber Network noted that the market remains characterized by tight supply but weak demand, suggesting that prices are likely to stay range-bound until one side of the fundamental equation changes more decisively.
Key Factors to Watch
Market participants will closely monitor the following developments in the coming days:
Weather conditions in Thailand, Vietnam, Malaysia, China, and Indonesia;
Production recovery as rainfall eases;
Tire factory operating rates during September;
Inventory movements in Qingdao;
Crude oil prices, the U.S. dollar, and broader global economic sentiment.
Technical Outlook: SICOM
Disclaimer: The following technical analysis is for reference only and should not be considered investment advice or a guarantee of future price movements.
Technically, the September SICOM TSR20 contract continues to maintain its short-term upward trend after posting steady gains throughout August. With prices currently at 241.9 US cents/kg, bullish momentum remains intact.
As long as prices hold above the psychological support level of 240 US cents/kg, the contract is likely to test the 243–245 US cents/kg resistance zone.
On the downside, if profit-taking pushes prices below 240 US cents/kg, the market could return to a consolidation range of 237–239 US cents/kg before establishing its next direction.
Short-Term Outlook
Overall, the short-term outlook for the natural rubber market remains constructive with limited volatility. Tight raw material supplies caused by unfavorable weather, continued inventory drawdowns, and elevated raw material costs are expected to remain the primary pillars supporting prices.
Nevertheless, unless demand from the tire industry shows a more convincing recovery, upside potential is likely to remain limited. As a result, the market is expected to trade sideways with a mild upward bias while awaiting stronger demand during the traditional "Golden September, Silver October" season.