Rubber Prices Rebound Sharply on Global Supply Concerns and El Niño Fears, TSR20 Eyes 250 Cents/kg
Medan, September 8, 2026 – Global natural rubber prices extended their strong gains on Tuesday (September 8) after surging in the previous trading session. The robust rebound was driven by mounting concerns over potential global supply disruptions caused by adverse weather, declining rubber inventories in the Chinese market, and expectations that the El Niño phenomenon will affect production in major Southeast Asian producing countries. These factors encouraged investors to increase buying positions amid expectations of tighter supply.
As of around 10:40 a.m. WIB (Western Indonesia Time), the SICOM TSR20 October contract was traded at 248.6 US cents per kilogram, up 6.7 cents from the previous close. Meanwhile, the benchmark Shanghai Futures Exchange (SHFE) January 2027 contract climbed to 19,605 yuan per tonne, reflecting broad-based bullish sentiment across the global rubber market.
Tuesday's gains followed Monday's rally, during which the benchmark SHFE contract surged by about 480 yuan per tonne. In China's physical market, prices of various rubber grades, including full latex and Thai Mixed Rubber, also increased by around 450 yuan per tonne, indicating that the strength was evident in both futures and spot markets.
Supply Concerns Dominate Market Sentiment
Market participants remain primarily focused on supply risks rather than demand developments.
The El Niño phenomenon is expected to strengthen during the second half of the year, raising concerns over rubber production in Thailand, Indonesia, Malaysia, and Vietnam. At the same time, heavy rainfall in several parts of Thailand continues to disrupt tapping activities, potentially reducing short-term raw material supply.
The combination of current wet weather, which hampers harvesting, and the prospect of drier conditions linked to El Niño in the coming months has led the market to anticipate continued tightness in natural rubber supply. Consequently, investors have increased long positions in anticipation of a prolonged supply deficit.
Falling Inventories Reinforce the Rally
Besides weather-related concerns, declining inventories have become another major catalyst supporting higher prices.
Rubber inventories at Qingdao Port as well as stocks across the Chinese market have continued to decline. Shrinking inventories have made the market increasingly sensitive to any potential supply disruption, further strengthening bullish sentiment.
Meanwhile, the Association of Natural Rubber Producing Countries (ANRPC) reported that global natural rubber production in July fell by approximately 5.2% from the previous month to around 1.321 million tonnes. Consumption, however, remained relatively robust, keeping the global market in a tight supply balance.
Higher Oil Prices and Synthetic Rubber Also Provide Support
Natural rubber prices have also benefited from rising synthetic rubber production costs.
Persistently elevated crude oil prices have pushed up synthetic rubber production costs, narrowing the price gap between synthetic and natural rubber and improving the competitiveness of natural rubber as a key raw material for tire manufacturers.
In addition, market participants are anticipating stronger manufacturing activity in China during the traditional Golden September–Silver October period, which historically marks a seasonal increase in industrial production and raw material demand.
Demand Recovery Remains Gradual
Despite strong supply-side support, demand has yet to fully recover.
Vehicle sales in China continue to grow at a moderate pace, while many tire manufacturers are still purchasing raw materials based on immediate production needs. As a result, the recent price rally has been driven primarily by supply concerns rather than a significant improvement in actual consumption.
Nevertheless, if manufacturing activity and vehicle sales strengthen during the fourth quarter, rubber demand is expected to improve further, providing additional support to prices.
Technical Analysis: SICOM TSR20
Technically, the October SICOM TSR20 contract remains in a bullish trend after posting sharp gains over the past two consecutive trading sessions. The rise to 248.6 US cents/kg indicates that buying momentum remains strong, supported by favorable fundamental factors.
As long as prices remain above the 245.0–246.0 US cents/kg support zone, the upside potential remains intact, with the immediate target seen at 250.0 US cents/kg. A decisive breakout above this psychological level, accompanied by sustained trading volume, could pave the way for further gains toward the 253.0–255.0 US cents/kg range.
However, given the substantial rally over the past two days, profit-taking cannot be ruled out. The 245.0 US cents/kg level serves as the first key support. A break below this level could trigger a corrective move toward 241.0–242.0 US cents/kg before prices establish a new direction.
Overall, the market structure remains bullish, underpinned by weather-related risks, declining inventories, and expectations of tighter global supply.
Disclaimer: The above technical analysis is based on current price movements in the SICOM TSR20 contract and prevailing market conditions. It is intended solely for informational purposes and should not be construed as investment advice or a recommendation to buy or sell futures contracts. Commodity prices remain subject to changes in global fundamentals, weather conditions, and market sentiment, which may shift at any time.