Rubber Futures Rise to 6-Week High

Rubber futures climbed above 220 US cents per kilogram in early May, hitting a fresh high since February 2017, driven by concerns over supply shortages from weather disruptions. Supply tightness fears rose after Thailand’s meteorological agency warned of storms from May 7–12 that may cause damage and flooding in key regions. Market participants are also tracking stronger El Niño forecasts, expected to be the most severe in a decade. While rubber trees are relatively resilient, analysts note prolonged dry conditions could still cut yields. Meanwhile, China has introduced a zero-tariff deal with 33 African nations, including Ivory Coast, but the China Rubber Industry Association said natural rubber is excluded from tax exemptions. Elevated oil prices also added support, as rubber prices are closely tied to crude oil. Higher oil prices increase production costs for synthetic rubber, making natural rubber more attractive.

Rubber futures climbed toward 218 US cents per kilogram in early May, reaching a fresh high since February 2017, partly driven by elevated oil prices amid ongoing Middle East conflict. Natural rubber prices are closely linked to crude oil, as higher oil prices raise the cost of synthetic rubber production, making natural rubber relatively more attractive. On the supply front, according to CITIC Futures, the post–May Day period in China could mark the start of large-scale latex tapping in Vietnam and Thailand, pointing to a rise in global rubber supply. This outlook reinforced the improving weather conditions in China, where increased rainfall in Yunnan has eased earlier concerns over tight supply caused by heat and drought.

Rubber futures extended their rally to cross 215 US cents per kilogram, the highest level since February 2017, largely driven by firmer oil prices amid stalled US-Iran talks and continued tensions over the Strait of Hormuz. Natural rubber prices track crude oil closely, since rising oil costs make synthetic rubber more expensive and enhance the competitiveness of natural rubber. Meanwhile, the supply outlook has improved with the start of the harvest season in top producers Thailand and Vietnam, while rainfall in China’s Yunnan province has eased earlier concerns over tight supply following heat and drought. On the demand side, reports suggest many Chinese factories have already stocked up ahead of the May Day holiday (May 1–5), which could weigh on rubber consumption in the near term.