Natural Rubber: Beware of Peak and Pullback as Super El Nino Confirmed(Oct 20)

Natural Rubber: Beware of Peak and Pullback as Super El Nino Confirmed

Source: China Financial Information Network / Futures Daily

http://www.cnfin.com/dz-lb/detail/20261014/4480434_1.html

In the short term, strengthened cost support combined with low NR futures inventory makes rubber prices prone to rise rather than fall. However, as rubber raw material supply increases and tire enterprises' operating rates decline, rubber prices face the risk of peaking and pulling back.

The fourth quarter is the peak supply season for Thai rubber, and domestic rubber import volumes are expected to increase. Meanwhile, high rubber prices will continue to suppress tire enterprises' operating rates. Therefore, both Qingdao-area natural rubber spot inventory and domestic social inventory will enter an accumulation phase.

The National Climate Center has confirmed that a super El Nino event officially formed in September 2026, with equatorial central-eastern Pacific sea surface temperatures expected to continue rising over the next three months, peaking in late autumn and early winter, becoming the strongest El Nino event since systematic monitoring began.

On the supply side, data from the China Rubber Information Trade Network shows that in the first eight months of this year, ANRPC member countries' natural rubber production fell 4.9% year-on-year, while non-ANRPC member countries' production increased 0.5% year-on-year. Global natural rubber total production was 8.678 million tons, down 3% year-on-year. Production changes in Thailand, Vietnam, Indonesia, Malaysia, and China were +0.2%, -6.9%, -8.8%, -17.9%, and +3.5% respectively.

These data indicate that Southeast Asian rubber production declines this year have dragged down global natural rubber output. The main reason is that climate in major Southeast Asian rubber producing areas was relatively dry in the first half of the year, not only delaying the start of tapping but also affecting raw material output.

ANRPC's report released in June this year showed that persistent El Nino phenomena caused abnormal high temperatures and rainfall in Southeast Asia, directly causing global rubber production to decline. Additionally, domestic and international rubber raw material prices have risen sharply this year, indirectly reflecting the tightening supply situation. As of October, Thai latex and cup lump prices have risen 61.8% and 57.9% respectively from the beginning of the year.

Affected by Southeast Asian rubber production declines, China's natural rubber imports in the first eight months were 4.076 million tons, down 1.1% year-on-year. Notably, total imports from Myanmar, Cambodia, Laos, and Africa increased 29% year-on-year, partially offsetting the decline in imports from Thailand, Vietnam, Malaysia, and Indonesia.

On the demand side, global natural rubber consumption in the first eight months was 9.89 million tons, down 2.9% year-on-year, with the decline mainly driven by rising rubber prices dampening downstream consumption willingness. In the tire sector, prices of natural rubber, synthetic rubber, carbon black, and additives have remained persistently high, continuously increasing cost pressure on tire enterprises.

Since September, multiple tire enterprises have issued price increase notices, raising finished tire prices. Some enterprises arranged maintenance shutdowns starting from the Mid-Autumn Festival, with more choosing to suspend operations during the National Day holiday. This round of planned maintenance lasts 5 to 10 days, with both the number of closed plants and individual plant closure days exceeding previous years, dragging down tire enterprises' capacity utilization rates significantly.

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