Rubber Hits Two-Week High

Rubber futures rose above 218 US cents per kilogram, supported by concerns over tighter near-term supplies as heavy rainfall disrupted harvesting across Southeast Asia. Although the region, the world's largest rubber-producing area, is typically in its peak harvesting season between June and September, persistent rain has slowed production. However, gains were capped by mounting demand concerns after the European Commission imposed anti-dumping duties of 4.3% to 45.3% on imports of passenger car, light truck, and bus tyres from China, raising fears that weaker Chinese tyre exports to the EU could curb natural rubber consumption. Adding to demand concerns, China's vehicle sales fell for a ninth month in June. Elsewhere, easing oil prices also limited gains, as cheaper crude reduces the production cost of petroleum-based synthetic rubber, a key competitor to natural rubber.

Rubber futures rose to near 218 US cents per kilogram, up from recent two-month lows of $208.6 cents per kilogram, on short covering and rising prices of crude oil. Because synthetic rubber is made from petroleum, higher oil prices increase its production costs, encouraging manufacturers to switch to natural rubber. At the same time, Liberia's ban on raw natural rubber exports fueled concerns over tighter near-term supply, with global inventories already running low. Southeast Asia, the world's top rubber-producing region, is currently in its mid-season harvesting period, but heavy monsoon rains have been disrupting operations. However, persistent weak demand prospects in top buyer China limited the upside. Chinese broker Gouxin Futures said the semi-steel tire segment remains under pressure as manufacturers contend with weak new-order expectations and rising inventories. It added that some manufacturers have begun maintenance shutdowns this month, reducing near-term rubber demand.

Rubber futures fell below 210 US cents per kilogram in early July, near their lowest level in almost two months, as a weakening outlook for Chinese auto demand and improving supply prospects weighed on prices. Concerns over tire demand intensified after BYD's domestic sales fell 22% year-on-year in June, while the China Passenger Car Association lowered its 2026 car sales forecast to an 11% decline from a previously projected 1% drop. Meanwhile, rubber output increased across major Southeast Asian producers, including Thailand, Indonesia, and Vietnam. Indonesia and Vietnam are entering their seasonal production upswing, with favorable weather boosting latex yields and tapping activity, further improving supply prospects. Oil prices also extended their losses, remaining close to pre-conflict levels and adding pressure to natural rubber, which competes with petroleum-based synthetic rubber.