Rubber Futures Ease

Rubber futures fell toward 224 US cents per kilogram, a near two-week low, helped by softer oil prices and expectations of improved supply availability. The main driver was Southeast Asia’s gradual seasonal production ramp-up, despite uneven weather conditions in producing regions due to rainfall and drought. Another factor was a report of increased Thai rubber shipments to China. In the meantime, the Association of Natural Rubber Producing Countries (ANRPC) projected global natural rubber production to rise by 2.4% to 15.34 million tonnes in 2026, reinforcing prospects of higher output. Meanwhile, demand signals from the auto sector remain mixed. Total EU car sales rose 3.2% year-on-year to 955 units in May, while China’s vehicle sales fell 2.1% to 2.63 million units.

Rubber traded around 230 US cents per kilogram, holding near its highest level since late 2023 as markets balanced optimism over a potential US-Iran peace agreement with concerns that an El Niño weather pattern could disrupt production. Weather risks and firm demand from the automotive sector have supported prices, keeping sentiment positive. Demand signals from the auto sector remain mixed but broadly supportive. China’s vehicle sales rose to 2.63 million units in May, driven by passenger cars, while global tire makers continued expanding. Sailun Tire announced a $1.14 billion tire project in Egypt, adding major capacity for passenger, truck, and off-road tires. Michelin remained the world’s most valuable tire brand, while Giti Tire ranked as the fastest-growing. Pirelli also extended its Formula 1 tire supply deal through 2028, reinforcing long-term demand visibility for the rubber industry.

Rubber futures rose further to surpass 231 US cents per kilogram, near the highest since early June, amid ongoing weather-related supply concerns. Major Asian rubber producers, including Thailand and Vietnam, are currently affected by seasonal heavy rainfall associated with the monsoon period, which is disrupting tapping activities and also curbing output. Rubber tapping is highly weather-sensitive, as heavy rain reduces tapping hours and delays latex collection, even during the May-to-October peak season when output would normally rise under more favourable conditions. Meanwhile, lower oil prices linked to the anticipated US-Iran deal limited the upside, making synthetic rubber more competitive and weighing on demand for natural rubber.