SICOM Rebound or Bull Trap? El Niño, Thailand Supply Disruptions, and Rising Costs Keep Global Rubber Prices Heated Up

Medan, May 12, 2026 — The global rubber market has once again shown bullish tension after raw material prices in Thailand surged sharply over the past few days. Rising prices of latex, cup lump, and smoked sheet in Thailand have strengthened cost support while maintaining positive sentiment in global rubber futures markets.

Morning trading at 7:10 WIB showed the main June-delivery SICOM TSR20 SGX contract at 222.1 US cents/kg, down slightly by 1.2 points, while the most active September RSS3 contract on SHFE held steady at 17,810 yuan/ton.

Nevertheless, analysts believe the market remains in a phase of “strong consolidation” — strengthening amid high volatility — as expectations of global supply disruptions continue to clash with weak downstream demand, especially from the tire sector.

The surge in raw material prices in Thailand has become the market’s main focus. Latest data showed RSS prices rising to 90 THB/kg, latex to 86 THB/kg, and cup lump reaching 70.5 THB/kg. These conditions indicate that farmer-level raw material supply remains relatively tight, although signs of easing have started to emerge compared with the peak tensions seen in April.

Thailand remains the heart of global natural rubber production. Therefore, every change in raw material prices in the country almost always becomes a key determinant of global price direction.

On the other hand, the world is entering a period of seasonal production increases. China has begun accelerating tapping activities in several regions, while Southeast Asian countries are gradually entering harvesting phases. However, the market remains overshadowed by the risk of extreme weather caused by El Niño, which is expected to strengthen into a moderate-to-strong phase during mid-to-late 2026.

Historically, El Niño has been viewed as a major driver of rubber prices. The phenomenon typically causes prolonged heat and drought that reduce rubber tree productivity, cut tapping days, and increase the risk of leaf fall disease.

Market participants still remember the major rubber price surges in 2016 and 2024, both triggered by a combination of extreme weather and Thailand production disruptions. At the time, market reactions far exceeded actual production declines because expectations of supply shortages triggered panic buying in futures markets.

However, unlike in 2016, current global demand conditions do not yet fully support an aggressive rally.

The global tire industry remains under pressure. Tire factory operating rates in China have fallen significantly, while finished tire inventories in Shandong continue to rise, indicating that end-market absorption remains slow.

China’s heavy truck sales in April 2026 reached around 125,000 units, up 43 percent year-on-year, but down roughly 10 percent on a monthly basis. This suggests that recovery in the logistics and construction sectors has not yet fully stabilized.

Meanwhile, natural rubber inventories in Qingdao rose to around 716,300 tons, becoming one of the factors limiting further price gains.

On the synthetic side, butadiene rubber production has started increasing again, although operating rates at butadiene feedstock plants have declined. This has created a unique dynamic between natural and synthetic rubber markets.

Analysts believe the relationship between the two remains very close. When natural rubber prices rise too high, tire manufacturers tend to increase synthetic rubber usage. However, such substitution has technical limitations, especially for truck tires and aircraft tires that still require high natural rubber content.

Fundamentally, the rubber market is currently in a “tight but fragile” phase — supply is not yet fully loose, but demand is also not strong enough to create a sustained long-term rally.

Technical Analysis (TA)

Technically, SICOM TSR20 has continued moving within a medium-term bullish pattern since early January 2026. Prices have formed higher lows and higher highs, indicating that the uptrend has not yet been broken.

For SHFE RSS3:

• Strong support lies in the 17,300–17,450 area

• The next psychological support stands at 16,900

• Near-term resistance is located at 18,050–18,200

• Major resistance sits around 18,600–19,000

As long as prices remain above the 17,300 area, the opportunity for further rebound remains open.

Daily stochastic and RSI momentum indicators have started moving upward from neutral territory after previously facing profit-taking pressure. This suggests that the market is attempting to build fresh momentum.

However, trading volume has not yet shown strong euphoria, meaning the current rally is still considered a “cautious rebound.”

Fundamental Analysis (FA)

Fundamentally, four main factors are supporting prices:

• El Niño and extreme weather threats

• Rising Thailand raw material prices

• Still-high synthetic rubber production costs

• Expectations of further economic stimulus from China

However, several factors are limiting further gains:

• High tire inventories

• Tire export demand has not fully recovered

• Rising Chinese port inventories

• Global manufacturing activity remains relatively weak

Will This Rebound Last?

In the short term, the rebound is expected to persist throughout this week, especially if Thailand raw material prices remain elevated and there is no major pressure from global macro markets.

The market is expected to move in a pattern that is:

• Limited bullish

• Volatile

• Highly sensitive to weather news and Thailand production conditions

However, for a major long-term rally similar to 2016 or 2024, the market still needs additional catalysts such as:

• Actual production disruptions due to weather

• Significant inventory declines

• Or a sharp surge in global tire demand

Without major supply disruptions, price gains could become capped and shift into a bullish sideways trend.

This Week’s Outlook

For this week’s trading, the market is expected to move within:

• SICOM TSR20: 220–228 US cents/kg

• SHFE RSS3: 17,500–18,200 yuan/ton

If resistance at 18,200 is successfully broken with strong volume, the market could open the way toward the 18,600 area.

Conversely, if profit-taking pressure returns and China demand data weakens, prices could retest the 17,300 support zone.

Market participants are now closely monitoring:

• The development of El Niño

• Weather conditions in Thailand

• Chinese port inventories

• And the performance of the global tire industry

For now, the market still prefers to believe that the “supply risk story” is not over yet.