Natural Rubber Market Range-Bound

The natural rubber market has recently exhibited a range-bound trading pattern. As a core raw material for tire production, its price trend is influenced by a complex interplay of factors, including supply and demand, geopolitical tensions, and the macroeconomic environment, lacking a clear unilateral driver in the short term.

As of December 23, the closing price of the Shanghai rubber futures main contract 2605 was 15,290 yuan/ton, up 0.73% on the day and up 0.79% cumulatively over the past five days. In the spot market, the intended transaction price for 24-year SCRWF rubber in Shanghai was 14,900-14,950 yuan/ton, and the intended transaction price for Vietnamese 3L mixed rubber was 15,250-15,300 yuan/ton. Prices rebounded slightly from the previous day, but market activity remained weak, with limited downstream inquiries.

On the supply side, a divergent pattern emerged: "domestic tapping halts to reduce pressure, while overseas supply increases are anticipated," creating both support and pressure on prices. Domestically, Yunnan and Hainan, the two main producing areas, have fully entered the off-season for rubber tapping.

In Yunnan, affected by falling temperatures, the purchase and processing of fresh latex has essentially ceased, with the market mainly consisting of stockpiled rubber blocks. Hainan also completed its off-season around December 20th, with private factories gradually ceasing operations, officially ending the 2025 rubber tapping season.

Data shows that from January to October 2025, domestic natural rubber production reached 722,800 tons, a year-on-year increase of 7.88%. The market has now entered a phase of inventory depletion, significantly easing domestic supply pressure. Internationally, major Southeast Asian producing areas such as Thailand and Indonesia are still in their peak production season.

ANRPC predicts that global natural rubber production in 2025 will increase by 1.3% year-on-year to 14.892 million tons, with Thailand's production increasing by 1.2%. With the weakening of weather disturbances, the expected increase in overseas raw material supply is strengthening.

It is worth noting that the escalating conflict between Thailand and Cambodia has fueled market speculation, leading to the shutdown of some rubber factories along the Thai border. This has temporarily pushed up overseas raw material prices, providing some support for global supply. However, the actual impact is limited and has not changed the overall expectation of ample supply.

On the demand side, the tire industry is the core support, but off-season characteristics are evident, and high inventory levels are limiting restocking enthusiasm. The tire manufacturing industry accounts for over 60% of downstream demand for natural rubber. Recently, domestic tire companies have maintained high operating rates, but the problem of accumulated finished product inventory is prominent, limiting companies' initiative to restock.

In the end-user automotive market, in November 2025, domestic automobile production and sales reached 3.532 million and 3.429 million units respectively, representing year-on-year increases of 2.8% and 3.4%, with monthly production hitting a record high.

The heavy truck market performed exceptionally well, with November sales increasing by 46% year-on-year, and cumulative sales from January to November reaching 1.03 million units, a year-on-year increase of 26%, becoming an important support for tire demand.

However, as the weather turns colder, the demand for all-steel tire replacements enters a seasonal off-season, and inventory in the Qingdao bonded area continues to climb. As of December 21, the total inventory of natural rubber in Qingdao, including both bonded and general trade, reached 515,200 tons, marking eight consecutive weeks of growth, with an increase of 3.28%. This inventory pressure is significantly suppressing prices.

Furthermore, while domestic rubber tire exports saw a slight year-on-year increase in the first 11 months, weak overseas demand recovery, coupled with year-end pressure to recoup funds, led some holders to sell at low prices, exacerbating market uncertainty.

Domestically, following the Central Economic Work Conference, market sentiment improved, with a generally positive outlook. The inclusion of natural rubber in the national strategic reserve list and the expansion of the national reserve rotation scale to 500,000 tons/year are also beneficial for stabilizing the market supply and demand structure in the long term.

On the policy front, Yunnan and Hainan provinces have continued to introduce industry support policies. Hainan has increased the subsidy standard for improved varieties and cultivation methods of natural rubber to 3,100 yuan/mu, and Yunnan is promoting the construction of natural rubber product processing parks to support high-quality industrial development. However, these measures have limited direct impact on prices in the short term.

Looking ahead, the short-term natural rubber market is likely to remain range-bound due to a mix of bullish and bearish factors. Industry research shows that during December 15-31, a 75% market expectation of "range-bound" trading was present, while bullish and bearish expectations were only 17% and 8% respectively.

The bullish logic mainly relies on weather disturbances in domestic and international producing areas, domestic rubber tapping shutdowns, and speculation surrounding the Thai-Cambodian conflict. Bearish factors focus on overseas production releases, the continuation of the domestic inventory accumulation cycle, and cautious year-end sentiment.

The core of the range-bound view lies in the lack of clear drivers for either bullish or bearish trends, with no significant contradictions in the fundamentals. In terms of trading strategy, institutions generally recommend a wait-and-see approach. Aggressive traders may consider buying on dips, while also paying attention to opportunities for long 01/short 05 spreads.

In summary, on December 24, 2025, natural rubber prices were expected to trade within a range of 15,000-15,400 yuan/ton, with the balance between supply and demand, continued inventory accumulation, and marginal improvements in macroeconomic sentiment jointly driving price movements.