Rubber Futures Hover at 7-Week Low

Rubber futures traded around 240 US cents per kilogram, hovering near their lowest level since September 22, as persistently weak downstream tyre demand continued to weigh on prices. This was reflected in China's automotive market, where domestic vehicle sales plunged 26.6% year-on-year in October, extending the decline from September and signaling weaker demand in a key tyre-consuming market. However, tyre manufacturers have recently stepped up raw material purchases following price declines, offering some near-term support, although this appears to reflect restocking rather than a sustained recovery in consumption. On the supply side, rubber production was approaching the end of its seasonal cycle, while the diversion of some raw materials toward concentrated latex production was expected to limit growth in whole latex rubber output.

Rubber futures traded around 242 US cents per kilogram, their lowest since September 23, pressured by lower oil prices, which make synthetic rubber cheaper and reduce the relative appeal of natural rubber. On the supply side, heavy rainfall in key rubber-producing areas of southern Thailand added to existing concerns over disruptions to tapping activities and short-term supply. Rainfall has also affected northern Thailand, although conditions have been comparatively less severe. As the world's largest natural rubber producer, Thailand plays a crucial role in global supply, amplifying the market's sensitivity to weather-related disruptions. El Niño-related weather conditions also continued to affect cup-lump quality and production, while raw-material shortages in Indonesia added to supply constraints.

Rubber futures rose to around 255 US cents per kilogram, not far from their highest level since 2013, reached in mid-October, as persistent supply concerns supported prices. Heavy rainfall and flash-flood warnings across southern Thailand threatened to disrupt tapping activity, potentially limiting latex collection in key producing areas. El Niño-related weather conditions also continued to affect cup-lump quality and production, while raw-material shortages in Indonesia added to supply constraints. Meanwhile, improving rainfall in northern Thailand has allowed farmers to gradually resume tapping, supporting a recovery in output and providing some relief from earlier disruptions. However, gains were capped by lower crude oil prices, which made petroleum-based synthetic rubber more competitive and potentially diverted demand away from natural rubber.