Rubber Futures Slide Toward Two-Month Low

Rubber futures extended their decline below 210 US cents per kilogram in late June, approaching their lowest level since April, as expectations of stronger supply weighed on the market. Output increased across major Southeast Asian producers, including Thailand, Indonesia, and Vietnam, following the wintering season. Analysts also noted that Indonesia and Vietnam are entering their seasonal production upswing, with favorable weather accelerating fresh rubber output and tapping activity, further improving supply prospects. Meanwhile, rising synthetic rubber production added pressure by increasing the availability of substitute materials. Providing some support, oil prices edged higher following the recent US-Iran exchange of strikes, potentially increasing the cost of synthetic rubber, a crude oil-derived substitute for natural rubber.

Rubber futures fell to around 224 US cents per kilogram, hitting a 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.