Global Rubber Prices Hold at Elevated Levels as SICOM-TSR20 Nears 260 Cents; Tyre Price Hikes and Supply Risks in Focus

Medan, October 9, 2026 — Global natural rubber prices have remained firm as trading resumed following China’s extended National Day holiday. Rising raw material prices in producing countries, weather-related disruptions in several plantation areas, and concerns over long-term supply have continued to support the market. However, elevated prices are also creating challenges for downstream industries, particularly tyre manufacturers facing higher raw material costs.

In China’s futures market, the January 2027 natural rubber contract on the Shanghai Futures Exchange (SHFE) closed at 20,145 yuan per tonne on October 8, up 435 yuan, or 2.21%, from the previous trading session. Prices briefly reached their highest level since February 2017. Meanwhile, the benchmark Singapore SICOM-TSR20 technical rubber contract stood at 256.9 US cents per kilogram on October 7, up 2.5 cents from the September 30 closing level.

These movements indicate that positive sentiment continues to underpin international rubber markets. Nevertheless, prices in China and Singapore do not necessarily move by the same percentage because of differences in contract specifications, delivery periods, supply conditions, and trading mechanisms.

Thai Raw Material Prices Rise, Adding to Production Cost Pressures

On the supply side, rubber raw material prices in Thailand continue to show strength. On October 8, the purchasing price of field latex was reported at 86.50 baht per kilogram, up 3.50 baht from the pre-holiday level. Meanwhile, the price of cup lump rubber, or coagulated rubber collected in tapping cups, reached 79.25 baht per kilogram, an increase of 3.35 baht.

Higher prices for both raw materials reflect competition for supplies amid production uncertainty. Rainfall disrupting tapping activities in several Southeast Asian regions remains a concern for market participants. However, improving weather conditions in some areas and increased tapping activity during the production season could bring additional supplies to the market in the coming weeks.

In China’s domestic market, the price of Standard China Rubber Full Latex (SCRWF) in Shanghai ranged from 19,500 to 19,700 yuan per tonne on October 8. Prices increased by approximately 225 yuan from the previous trading day. However, physical rubber prices remained below the January 2027 futures contract, indicating that the strength in futures markets has not yet been fully reflected in physical market prices.

Weather Conditions and El Niño Remain Key Market Concerns

Beyond short-term weather conditions, the potential impact of El Niño on natural rubber production is another concern for industry participants. Changes in rainfall patterns, extreme temperatures, and drought can affect tree productivity and the number of days suitable for tapping.

However, weather impacts vary across producing countries. In the short term, price movements will continue to depend on actual production levels, distribution efficiency, inventory levels, and the downstream industry's ability to absorb higher prices.

Expectations of weather-related production losses should therefore be distinguished from actual supply declines. If production increases as tapping conditions improve in the fourth quarter, supply pressure could ease and limit further price gains.

Inventories and Demand Will Determine the Next Market Direction

Inventory developments following China's extended holiday are an important factor to watch. Reduced industrial activity during the holiday may temporarily slow raw material consumption, while shipments and deliveries continue. This could lead to a short-term accumulation of inventories.

On the other hand, relatively limited inventories in certain trading channels could help cushion prices against downward pressure. The market will be watching whether tyre manufacturers resume higher production levels and increase raw material procurement after the holiday.

Consequently, the current price strength is not sufficient on its own to confirm a sustained upward trend. The balance between new supply, inventories, and recovering demand will be an important test for rubber prices during the remainder of October.

More Than 60 Tyre Manufacturers Announce Price Increases

Higher rubber prices are also affecting downstream industries. Since September, more than 60 tyre manufacturers in China have reportedly issued over 70 price adjustment notices. Announced increases generally range from 2% to 5%, covering passenger car tyres, commercial vehicle tyres, and tyres for industrial applications and heavy equipment.

Cost pressures are not limited to natural rubber. Synthetic rubber, carbon black, and various supporting chemicals also influence production costs. When several of these inputs rise simultaneously, tyre manufacturers face pressure on their profit margins.

Industry strategies include adjusting production schedules according to orders, securing raw material requirements through contracts, and using hedging instruments to reduce exposure to price fluctuations. Developing higher-value products, including tyres designed for electric vehicles, is another way manufacturers are seeking to strengthen their competitiveness.

Higher tyre prices do not automatically indicate weakening demand. However, if increased costs are passed on fully to consumers, manufacturers must consider purchasing power, market competition, and distributors' ability to absorb the increases.

Rubber Industry Faces Growing Traceability and Sustainability Requirements

Beyond price movements, the natural rubber supply chain is facing increasingly stringent environmental requirements. The European Union Deforestation Regulation (EUDR) covers natural rubber and its derived products. Under the implementation schedule applicable at the time, the regulation was scheduled to take effect on December 30, 2026, for large and medium-sized operators, while most micro and small operators were given until June 30, 2027.

Businesses supplying the European market need to prepare supply chain traceability systems, including information on plantation origins and compliance with deforestation-related requirements. This is a significant challenge because approximately 85% of global natural rubber production comes from smallholders, whose plantations are dispersed across numerous locations. Raw materials also pass through multiple intermediaries before reaching manufacturers.

For Indonesia, strengthening origin records, providing support to smallholders, and improving productivity without expanding plantations at the expense of forests are becoming increasingly important. Agroforestry, replanting, and improved cultivation practices can help strengthen smallholder livelihoods while supporting a more resilient and sustainable supply chain.

Higher rubber prices provide smallholders with an opportunity to increase their income and invest in their plantations. However, these benefits will be more sustainable if price increases are accompanied by improvements in productivity, quality, and access to higher-value markets.

Price Outlook: Firm Bias, but Correction Risks Remain

In the short term, natural rubber prices may remain elevated, supported by high raw material costs, weather uncertainty, and concerns about long-term supply. Oil price movements also warrant attention because they affect synthetic rubber production costs. Synthetic rubber competes with natural rubber in tyre manufacturing.

Nevertheless, sharp price increases raise the risk of a correction if market participants take profits, new supplies increase, or demand recovery proves weaker than expected. Higher prices may also encourage smallholders to increase tapping activity, potentially easing some concerns over supply constraints.

For Indonesia's rubber industry, developments in SICOM-TSR20 should be monitored alongside domestic raw material prices, exchange rates, logistics costs, and demand from export destinations. SICOM-TSR20 is an important benchmark for technical rubber trading, but actual transaction prices remain dependent on product specifications, quality, delivery schedules, and contractual terms.

The market is now facing two opposing forces: supply concerns that support prices and the possibility of increased production that could limit further gains. The next phase will largely depend on the market's ability to absorb elevated prices and on actual production levels in major producing countries during the peak tapping season in the fourth quarter of 2026.