Rubber Futures Rise to 6-Week High

Rubber futures eased to around 225 US cents per kilogram, the lowest since late May, pressured by rising supply prospects and weak seasonal demand. Asian natural rubber producers like Thailand, Indonesia and Malaysia are currently in the main tapping season, which typically runs from around May to October. During this period, higher rainfall and more favourable growing conditions enable rubber trees to produce more latex, increasing supply. Supply in the synthetic rubber segment is also expected to rise as Chinese butadiene rubber producers restart operations at higher capacity following maintenance. On the demand side, the automotive market usually weakens in summer as consumers prioritise travel and leisure, reducing tyre demand and weighing on rubber prices.

Rubber futures traded around 230 US cents per kilogram in early June, near the highest level since January 2017, supported by weather-driven supply shortages. The world’s top two rubber-producing countries are expected to see tighter supply due to adverse weather conditions. In Thailand, the meteorological agency has warned of very heavy isolated rainfall in the south, raising the risk of flash floods, while Indonesia’s weather agency forecasts an early onset of dry conditions and below-normal rainfall in June. Despite differing weather patterns, both conditions could disrupt rubber tapping and harvesting activities, limiting output and constraining global supply. At the same time, renewed tensions in the Middle East pushed oil prices higher, adding support. Natural rubber prices tend to move with crude oil because higher oil prices make synthetic rubber more expensive, increasing demand for natural rubber.

Rubber futures traded above 220 US cents per kilogram, hovering near the highest since February 2017, supported by elevated oil prices amid ongoing Middle East tensions and weather concerns in major producing regions. Natural rubber prices closely track crude oil, as higher oil prices make synthetic rubber more expensive and boost demand for natural rubber. In major Southeast Asian producers, including Thailand, Indonesia and Vietnam, monsoon rains since mid-May have disrupted agricultural activity and constrained output, with elevated temperatures amid climate change also weighing on production. Thailand is also under maximum environmental alert due to an intense “Super El Niño” phenomenon expected to trigger severe drought conditions in the country. Meanwhile, weak tyre demand from the Middle East continues to weigh on rubber consumption, as the region imports large volumes of Chinese-made tyres that rely on rubber as a key input.