Global Rubber Prices Rally Again, Hit Two-Year High; Market Still Has Upside Potential, but Volatility Risks Remain
Medan, September 4, 2026 – The global natural rubber market continued to maintain its positive momentum through Friday afternoon's trading (September 4, 2026). After experiencing profit-taking in the previous session, futures contracts rebounded as concerns over tight global supply persisted due to adverse weather conditions, the threat of El Niño, and the continuation of the global supply deficit.
As of approximately 1:33 p.m. WIB, the SICOM TSR20 October contract was trading at US 234.2 cents/kg, up 1.5 cents from the previous close. Meanwhile, the Shanghai Futures Exchange (SHFE) January 2027 contract stood at 18,775 yuan per metric ton, gaining 55 yuan from the previous trading day. The price movement indicates that buying sentiment has once again dominated the market following a brief one-day correction.
In the previous session, market performance was mixed. Both the Osaka Exchange (OSE) and SHFE came under pressure due to weaker crude oil prices and a stronger Japanese yen, which reduced the attractiveness of commodities for overseas buyers. Nevertheless, international analysts viewed the decline as a technical correction following a prolonged rally rather than a shift in the market's underlying fundamentals.
In Singapore, the SICOM contract remained above US 232 cents/kg, signaling that market participants continue to view short-term price prospects as relatively strong.
Market fundamentals remain largely driven by supply constraints. The Association of Natural Rubber Producing Countries (ANRPC) estimates that global natural rubber production in 2026 will reach approximately 15.32 million metric tons, while consumption is projected at 15.60 million metric tons, resulting in a supply deficit of around 280,000 metric tons. The shortfall is expected to be even larger than last year's.
Production disruptions continue across nearly all major producing countries. Thailand is grappling with aging rubber trees, Indonesia continues to face outbreaks of leaf fall disease in several regions, while Vietnam is expected to record lower output. At the same time, the El Niño phenomenon is increasing the risk of drought across key plantation areas, reinforcing concerns over global supply.
In the short term, weather conditions remain a major focus. Heavy rainfall in northeastern Thailand and several production regions in Yunnan, China, has hampered tapping activities, preventing raw material supplies from growing as quickly as market demand. Meanwhile, China's social rubber inventories have edged up slightly to around 114.4 million tons, but the increase has been too modest to alter market perceptions of tight supply.
Beyond weather-related factors, geopolitical developments are also influencing market sentiment. Ongoing tensions in the Middle East continue to attract attention in the energy markets. Although crude oil prices remain volatile, concerns over potential energy supply disruptions have kept petrochemical feedstock prices relatively elevated. Rising butadiene prices, a key raw material for synthetic rubber, have encouraged some industrial consumers to increase their use of natural rubber as a substitute.
Downstream industries have begun passing higher costs on to consumers. Several major global tire manufacturers—including Michelin, Bridgestone, Zhongce Rubber, and Sailun Tire—have increased product prices by approximately 2–5% this year to offset the continued rise in raw material costs.
However, companies' ability to absorb higher costs varies significantly. Large manufacturers with stronger economies of scale and effective hedging strategies have generally been able to maintain earnings growth, while smaller producers continue to face margin pressure from rising production costs.
Historical data also point to a consistent upward trend throughout the year. The SICOM TSR20 price, which stood at approximately US 181.7 cents/kg in early January, has now climbed to US 234.2 cents/kg, representing a gain of around 29% year-to-date. Although prices experienced a correction in early September, they remain at historically elevated levels.
On the macroeconomic front, the market has also received support from expectations that the U.S. Federal Reserve may maintain its current interest rate policy if inflation continues to moderate. Such a stance could help sustain global economic activity and demand for industrial commodities, including natural rubber. Meanwhile, U.S. crude oil inventories fell by approximately 4.45 million barrels, indicating that energy consumption remains relatively robust.
Several research institutions expect rubber prices to maintain an upward bias through the end of the year, although gains are likely to be more moderate than those seen in recent months. The market is widely expected to enter a phase of "higher but more volatile," characterized by elevated prices accompanied by larger fluctuations.
Technical Analysis (Not Investment Advice)
Based on the performance of the SICOM TSR20 October contract as of approximately 1:33 p.m. WIB, the price stood at US 234.2 cents/kg, rebounding after a brief correction in the previous trading session. From a technical perspective, the short-term trend remains bullish, provided prices stay above the US 232.0–232.5 cents/kg range, which now serves as the nearest support zone and a key cushion following the strong rally of recent weeks.
If buying momentum remains intact and trading volume strengthens during the afternoon session, prices could retest the US 235.0–236.0 cents/kg resistance area. A convincing breakout above this level could pave the way toward US 237.5–239.0 cents/kg, with the possibility of challenging the psychological US 240 cents/kg level, one of the highest price points recorded in approximately the past two years.
Conversely, if profit-taking intensifies, prices may retreat toward the US 232.0–232.5 cents/kg range. A break below this support could open the door for further weakness toward US 230.0–231.0 cents/kg. However, this area is still expected to attract buying interest, as market fundamentals remain supported by the global supply deficit, weather-related production disruptions in major producing countries, and persistently high synthetic rubber production costs.
Overall, the technical structure of SICOM TSR20 continues to display a pattern of higher highs and higher lows, indicating that the short-term market bias remains positive. Nevertheless, volatility is expected to increase due to profit-taking activities, shifts in energy market sentiment, fluctuations in the U.S. dollar, and ongoing weather developments across key rubber-producing regions.
Disclaimer: The technical analysis above represents an interpretation of market prices and trends and should not be considered a recommendation to buy or sell futures contracts or physical commodities. Price movements may change at any time in response to evolving market fundamentals, weather conditions, geopolitical developments, global monetary policy, and international market sentiment.