Rubber Futures Surge to 13-Year Highs

Rubber futures traded around 256 US cents per kilogram, hovering near their lowest since early October. The supply outlook has improved as rainfall eased in Thailand ahead of the fourth-quarter peak production season, raising expectations that tapping activity will recover from recent disruptions caused by heavy rain and flooding. Greater raw-material availability could relieve supply tightness and ease raw material prices, if favorable weather conditions persist. Looking ahead, the expected persistence of the El Niño phenomenon through February 2027 poses a major risk to production. Meanwhile, persistently weak tyre demand from China, the world’s largest rubber consumer, also weighed on prices. Elevated oil prices helped limit the downside by raising the cost of petroleum-based synthetic rubber, making natural rubber relatively more competitive.

Rubber futures rose to around 265 US cents per kilogram, hitting its highest level since early 2013, driven by persistent supply concerns. Flooding in Thailand, a major producer, has disrupted output and operations at several auto parts suppliers, affecting deliveries to automakers. Heavy rainfall across producing regions is expected to persist until mid-October. Adding to weather-related concerns, the World Meteorological Organization said El Niño is nearly certain to continue through February 2027, posing further risks to production. Meanwhile, demand remained subdued in China, where semi-steel and all-steel tire production rates fell sharply amid holiday-related factory shutdowns, weak orders, and cautious purchasing. Easing oil prices also exerted downward pressure, lowering synthetic rubber production costs and reducing the appeal of natural rubber as a substitute.

Rubber futures rose to around 260 US cents per kilogram, revisiting levels not seen since March 2013, amid ongoing weather supply disruptions in major producing countries. In Thailand and parts of China, rainfall continued to disrupt rubber tapping, keeping latex and other raw material prices elevated. Low all-steel tyre inventories and continued destocking in Qingdao, a major trading and storage hub, added to the upward pressure. Higher oil prices provided additional support by raising the cost of synthetic rubber. Meanwhile, the development of a “strong” El Niño continued to pose risks to future production. Demand, however, remained subdued as Chinese tyre manufacturers entered the holiday period. Weak profitability had already led some manufacturers to halt operations and cut rubber purchases.