Rubber Prices Correct After Sharp Rally, Profit-Taking Starts to Pressure SICOM-TSR20
Medan, September 28, 2026 — Global rubber prices opened the week under correction pressure after posting a sharp rally throughout the previous trading week. The decline was visible in both SICOM-TSR20 and RSS3 rubber in Shanghai, although the overall fundamentals of the rubber market continue to receive support from relatively tight raw material supplies, weather disruptions in several Southeast Asian producing areas, and expectations of increased weather-related risks toward the end of the year.
As of 12:56 p.m. WIB on Monday (September 28), the October SICOM-TSR20 contract stood at 253.1 US cents/kg, down 3.1 cents from the previous close. Meanwhile, the most active January 2027 RSS3 rubber contract in Shanghai was around 19,400 yuan per ton, down 25 yuan.
The correction came after SICOM-TSR20 rose sharply over the previous week. Based on the monitored price movement, SICOM-TSR20 climbed from 238.0 cents/kg on September 21 to 256.2 cents/kg on September 25, an increase of approximately 7.6 percent in just four trading days. The move brought prices to a new high within the recent series of gains.
Historical market data also illustrates how quickly sentiment has changed. On September 18, SICOM-TSR20 was still around 236.8 cents/kg. The price then rose to 238.0 cents on September 21, 241.7 cents on September 22, 249.5 cents on September 23, and 254.0 cents on September 24 before reaching 256.2 cents on September 25. Historical market data also recorded the price briefly reaching around 262.9 cents/kg during trading on September 23.
After a Rapid Rally, the Market Is Taking a Breather
The current situation makes Monday's decline understandable. After prices rose more than seven percent in a short period, some market participants had room to lock in profits. In other words, profit-taking is very likely to be one of the main factors behind today's correction.
However, the correction does not mean that the fundamental factors supporting rubber prices have suddenly disappeared. Rather, the market is testing how strong the previous rally actually is.
The previous rally was supported by a combination of factors. Weather disruptions have prevented tapping activities from proceeding normally in some producing areas. At the same time, relatively high crude oil and synthetic rubber feedstock prices have supported natural rubber prices because synthetic rubber is one of the substitutes for natural rubber.
Meanwhile, demand from the tire industry remains a source of support, although it has not yet shown a strong enough surge to be described as a major wave of demand.
What About Flooding in Thailand?
Flooding in Thailand is indeed a factor that needs to be monitored, but it would not yet be appropriate to describe it as the main cause of today's price correction.
Thailand is one of the world's major rubber-producing centers, with a large share of its rubber plantations located in the southern region. Government data show that provinces such as Surat Thani, Songkhla, Nakhon Si Thammarat, Trang and Phatthalung, along with several other southern provinces, have substantial rubber-growing areas.
Thailand's Meteorological Department has reported widespread rainfall in recent weeks, with flooding occurring in several southern areas such as Krabi, Ranong, Phang-nga and Satun during September 18–20. For September 28–29, the southern region still faces the possibility of rain and thunderstorms.
This means that weather remains a factor that could disrupt tapping activities, but based on the official information currently available, there is not yet clear evidence that flooding is causing major and widespread disruption to Thailand's national rubber production.
Therefore, the impact of flooding is better viewed as an additional supply-risk factor, rather than the sole reason behind either the recent price rally or today's decline.
Global Supply Is Still Not Fully Loose
On the supply side, the rubber market is not yet in a situation where supply can be considered fully abundant.
The latest data show that China's natural rubber imports during January–August 2026 reached approximately 4.08 million tons, down about 1.1 percent from the same period last year. August imports did increase from July, but were still down around 6.7 percent year-on-year.
These figures indicate that China's demand remains substantial, but incoming supply has not expanded aggressively.
Data from ANRPC also showed that global natural rubber production in July was estimated at around 1.321 million tons, down 5.15 percent from July last year. Weather disruptions, uneven rainfall, high temperatures and the development of El Niño were cited as factors affecting production recovery.
There is, however, another side to the picture. ANRPC still expects global natural rubber production in 2026 to increase by around 2.1 percent to 15.279 million tons. Therefore, the issue is not simply a permanent shortage of rubber, but how quickly new supply can enter the market relative to industrial demand.
El Niño Remains a Factor in Market Expectations
The development of El Niño is also receiving close attention. The World Meteorological Organization (WMO) has stated that El Niño has developed and is expected to strengthen, with an almost 100 percent probability of continuing through February 2027. WMO also warned that a very strong El Niño could increase changes in rainfall and temperature patterns and raise the risk of extreme weather in various regions.
For the rubber market, this does not automatically mean that production will fall. The impact depends heavily on the location and type of weather conditions that occur. However, if weather conditions disrupt tapping days or reduce latex output, raw material supplies could become tighter and support prices.
As a result, the market is currently assigning a weather-risk premium to longer-dated contracts. Whether that risk actually translates into a significant decline in production, however, will depend on actual production data over the coming months.
Demand Is Not Yet Strong Enough to Fully Absorb Higher Prices
On the demand side, the picture is somewhat different. The tire industry continues to require rubber, but purchases have not yet shown an aggressive pattern.
ANRPC considers China's natural rubber demand relatively stable, while growth in tire production and exports remains limited as manufacturers remain cautious about raw material purchases. The expansion of electric vehicles in China, India, Southeast Asia and Europe remains a positive factor for long-term tire demand.
This is one reason why a rapid rise in rubber prices could encounter resistance. When raw material prices increase sharply, tire manufacturers tend to become more cautious with purchases and prioritize production requirements rather than building large inventories.
The rubber market is therefore currently facing two opposing forces: supply remains relatively tight on one side, while demand has not yet become strong enough on the other.
Oil and Synthetic Rubber Continue to Provide Support
Crude oil prices remain relevant because they influence the production cost of synthetic rubber. Geopolitical tensions in the Middle East continue to keep energy prices relatively high and increase uncertainty over petrochemical feedstock supplies.
This situation prevents synthetic rubber from becoming a clearly cheaper alternative to natural rubber, providing indirect support to natural rubber prices.
However, high oil prices do not necessarily mean rubber prices must continue rising. Higher energy costs can ultimately increase industrial expenses and limit tire manufacturers' ability to absorb higher raw material costs.
Technically, the Correction Remains Relatively Normal
From a price-movement perspective, today's correction should be viewed in the context of the sharp rally seen last week.
SICOM-TSR20 moved from around 238 cents/kg to 256.2 cents/kg in only a few days. Therefore, the decline toward the 253-cent/kg area on Monday afternoon can still be viewed as a correction following a sharp rally, rather than an immediate indication that the upward trend has ended.
From a technical perspective — and this is only an estimate, not a certainty — the 250–252 cents/kg area is an important zone to watch to determine whether the correction can be contained. If this area holds, prices could still attempt to return toward 255–258 cents/kg.
Conversely, if selling pressure strengthens and prices break below approximately 250 cents/kg, the correction could extend toward the 247–249 cents/kg range. The 243–245 cents/kg area would become the next level to watch if selling pressure deepens.
For today's trading session, with the price around 253.1 cents/kg at 12:56 p.m. WIB, the 250–255 cents/kg range remains a reasonable area to monitor, with a potential test of 248–250 cents/kg if profit-taking intensifies.
These estimates are not fixed targets and may change rapidly in response to global market movements, exchange rates, crude oil prices, weather conditions in producing countries, and developments in Shanghai and Singapore.
The Market Has Not Reversed, but the Euphoria Is Being Tested
Overall, the SICOM-TSR20 correction at the start of this week is better interpreted as a test of the sharp rally seen last week.
Fundamentals continue to provide support: raw material supplies have not fully normalized, weather remains a risk, El Niño is developing strongly, inventories are showing a declining tendency, and oil prices continue to provide support to synthetic rubber.
However, the market also has reasons for caution. The rapid price increase has encouraged some participants to lock in profits, while tire-industry demand has not yet strengthened sufficiently to justify an uninterrupted rally.
Therefore, the market's attention this week will not only be focused on whether prices can break back above last week's high, but also on whether the correction can hold above the 250-cent/kg area.
If that level holds, the correction could simply represent a pause following the sharp rally. Conversely, if selling pressure intensifies and that area fails to hold, the market could enter a longer adjustment phase before determining its next direction.