Global Rubber Prices Ease, but Fundamentals Remain Firm After Hitting Highest Level Since March 2023
Medan, September 10, 2026 – Global natural rubber prices edged lower in Thursday's midday trading after posting a strong rally in the previous session that lifted prices to their highest level since March 2023. Market participants viewed the latest decline largely as profit-taking following recent sharp gains, while underlying fundamentals continue to support prices.
As of 11:19 a.m. WIB (0419 GMT), the SICOM TSR20 October contract was quoted at 247.6 U.S. cents per kilogram, down 2.3 cents from Wednesday's close of 249.9 cents/kg.
Meanwhile, the most-active January 2027 RSS3 contract on the Shanghai Futures Exchange (SHFE) traded at 19,600 yuan ($2,922) per metric ton, down 20 yuan from the previous session.
Despite Thursday's pullback, prices remain at elevated levels. The SICOM TSR20 settlement of 249.9 cents/kg on September 9 marked the highest level since March 2023, extending the benchmark's gain to more than 36% since the beginning of 2026, when prices stood at 181.7 cents/kg.
Rally Driven by Oil, Supply Concerns
Wednesday's rally was fueled by several bullish factors.
The biggest catalyst was the sharp rise in crude oil prices. Brent crude traded above US$100 per barrel as escalating geopolitical tensions in the Middle East heightened fears of disruptions to global oil supplies.
Higher crude prices raise production costs for synthetic rubber, which is derived from petrochemical feedstocks such as butadiene. As synthetic rubber becomes more expensive, manufacturers tend to increase the use of natural rubber, supporting demand.
At the same time, global natural rubber supplies remain tight.
The Association of Natural Rubber Producing Countries (ANRPC) projects global natural rubber production at approximately 15.32 million metric tons in 2026, while consumption is expected to reach 15.60 million tons, leaving the market with an estimated deficit of 280,000 tons.
Supply risks continue to build across major producing countries.
Thailand faces declining productivity due to aging rubber trees, Indonesia continues to experience production and transportation disruptions caused by forest fires and haze, while Vietnam is expected to produce less rubber this year. In addition, concerns over the impact of El Niño on rainfall across Southeast Asia continue to weigh on market sentiment.
Indonesia's exports have also reinforced supply concerns.
Natural rubber exports from Indonesia declined by approximately 21% year-on-year during the first seven months of 2026, further tightening supplies in the global market.
Tire Industry Under Cost Pressure
The surge in raw material costs has continued to ripple through downstream industries.
Besides natural rubber, butadiene—the primary feedstock for synthetic rubber—remains expensive because of tight supply. Prices of carbon black, another key raw material used in tire manufacturing, have also climbed sharply and are approaching 10,000 yuan per ton.
As a result, dozens of tire manufacturers, including Michelin, Bridgestone, Zhongce Rubber, Sailun, Giti Tire, Wanli, and Prinx Chengshan, have announced product price increases ranging from 2% to 5% over recent weeks.
Many producers are also expanding hedging activities, securing longer-term supply contracts, improving procurement strategies, and increasing sales of higher-margin products to offset rising production costs.
Why Are Prices Falling Today?
Thursday's decline is widely regarded as a technical correction following the recent rally.
Investors are taking profits after prices reached multi-year highs, while others are awaiting upcoming U.S. economic data that could influence the U.S. dollar and broader commodity markets.
Meanwhile, although Brent crude remains above US$100 per barrel, the absence of fresh bullish catalysts during Asian trading has limited further gains.
Demand fundamentals are also mixed.
Although the tire industry has entered the traditional "Golden September and October" peak season, downstream manufacturers continue to purchase raw materials mainly on an as-needed basis rather than aggressively building inventories. This suggests that recent price gains have been driven primarily by higher production costs rather than a significant improvement in end-user demand.
Outlook Remains Positive
Fundamentally, the market continues to receive support from constrained global supply, elevated crude oil prices, and expensive synthetic rubber feedstocks.
Unless these factors change materially, analysts believe the downside for natural rubber prices remains limited.
Disclaimer: The following technical assessment reflects general market observations and should not be considered investment advice.
From a technical perspective, the active SHFE contract continues to hold above the important 19,500 yuan per ton support level, suggesting that the short-term uptrend remains intact.
If prices stay above this level, the market could retest the 19,800–20,000 yuan per ton resistance zone. A successful breakout above 20,000 yuan could open the way toward 20,200–20,500 yuan per ton.
On the downside, 19,400–19,500 yuan per ton is expected to provide the nearest support.
For SICOM TSR20, prices are expected to remain constructive as long as they hold above 246–247 U.S. cents/kg, with potential to retest the 250–252 cents/kg range.
Overall, Thursday's weakness appears to be a short-term correction after Wednesday's strong rally. With global supply remaining tight and geopolitical tensions continuing to support high crude oil prices, the broader outlook for natural rubber prices remains positive.