Natural Rubber Market Trend

On July 29, 2025, the natural rubber market continued its recent weak trend. The main contract of natural rubber on the Shanghai Futures Exchange fell to 15,030 yuan/ton on the same day, down 1.38% from the previous trading day, showing a two-day decline. This price has fallen by about 3.8% from the stage high of 15,630 yuan/ton on July 25, reflecting the continued fermentation of insufficient market confidence and supply-demand contradictions.

From a short-term technical perspective, the price of rubber futures has fallen below the key psychological support level of 15,000 yuan/ton, and the MACD indicator shows that the short-selling momentum has increased, and the RSI indicator is hovering around 30.

The market is in an oversold state but lacks the momentum to rebound. The main contract position data shows that as of July 25, the net short position of the top 20 seats reached 11,599 lots, and the short-selling force dominated. This dual pressure from the technical and capital aspects limits the upward space of short-term prices.

In-depth analysis of supply and demand fundamentals

1. Supply side: production increase cycle and policy shock coexist
The world's major natural rubber producing countries are in a seasonal production increase period. Southeast Asian countries such as Thailand, Vietnam, and Indonesia entered the peak season for rubber tapping in July. Although rainfall in some local areas in the early stage caused a brief disturbance to rubber tapping, the overall supply growth trend has not changed.

After the weather in the domestic production areas of Hainan and Yunnan improved, the purchase price of glue fell, the willingness of processing plants to rush to harvest at high prices cooled down, and the supply of raw materials gradually recovered.

It is worth noting that China's zero tariff policy on importing natural rubber from Laos and Myanmar continues to release dividends. In the first quarter of 2025, the import volume of natural rubber in China, Laos, Myanmar and Cambodia surged by 68.82% year-on-year, of which the import volume of standard rubber and smoked sheet rubber increased by 546% and 541% respectively.

This policy directly led to a year-on-year increase in non-standard inventory in Yunnan. As of July 20, China's social inventory of natural rubber reached 1.289 million tons, with a destocking rate of only 0.47%, and inventory pressure is still significant.

2. Demand side: The tire industry is under obvious pressure

As the largest consumer of natural rubber (accounting for more than 70%), the tire manufacturing industry is currently facing the dilemma of weak domestic and foreign demand. Data from the third week of July showed that although the domestic full-steel tire and semi-steel tire operating rates rebounded slightly to 65.08% and 75.62%, it was difficult to sell finished product inventories, especially the sluggish consumption of semi-steel tires closely related to exports.

Data from the General Administration of Customs showed that China's new pneumatic tire exports in June 2025 fell 7.3% year-on-year, and the amount fell 7.3%, reflecting weak demand in overseas markets.

Although the rapid penetration of new energy vehicles has brought structural opportunities, it is difficult to offset the decline in demand for traditional tires in the short term. In the second week of July, new energy vehicle sales fell 10% month-on-month, and the counter-trend growth of brands such as Tesla and Xiaomi failed to reverse the overall decline in the industry. In addition, demand in non-tire fields such as the foaming industry is also affected by consumption downgrades, and its pulling effect on rubber is limited.

Cost and Substitution Effect Analysis

1. Weakened Cost Support
The theoretical production cost of Hainan's full-strength latex was 13,720 yuan/ton in the week of July 10, up 280 yuan from the previous week. However, spot prices continued to remain below the cost line, severely compressing processors' profit margins. This inverted cost-price gap weakened companies' purchasing appetite and further suppressed a rebound in raw material prices.

2. Limited Substitution Pressure from Synthetic Rubber
Although crude oil prices rose to 515 yuan/ton (Shanghai crude oil main contract) on July 29, synthetic rubber prices were dragged down by weak demand. Butadiene rubber and styrene butadiene rubber operating rates were only 63.22% and 78.79%, respectively, and inventory pressures were also significant.

The current price gap between synthetic rubber and natural rubber is at a historical low, and the substitution effect is not significant, failing to provide effective support for natural rubber prices.

As of July 20, China's natural rubber social inventory stood at 1.289 million tons, a month-on-month decrease of only 0.47%, indicating minimal destocking activity. While inventories in the Qingdao Free Trade Zone have fallen to 91,900 tons, general trade inventories continue to accumulate, indicating continued import pressure. This pattern of "slow destocking combined with increasing imports" has prevented a turning point in inventories from occurring, becoming one of the key factors suppressing prices.

Looking ahead, natural rubber prices will continue to face the dual pressures of "loose supply and weak demand" in the short term, and are expected to fluctuate weakly between 14,500 and 15,500 yuan/ton. If demand fails to improve after the resolution of trade policy risks in August, prices could fall to their year-to-date low of 14,000 yuan/ton.

In the medium and long term, as the global aging problem of rubber trees intensifies (the planting area of major producing countries continues to shift to cash crops such as oil palm), coupled with the structural growth of China's demand for tires supporting new energy vehicles, the natural rubber market is expected to gradually enter a supply and demand rebalancing cycle by the end of 2025, and prices may usher in a trend reversal opportunity.

Risk Warning

Weather Risk: If the main producing areas in Southeast Asia encounter continuous heavy rains or droughts, supply may shrink beyond expectations.

Policy Risk: Changes in trade policies between China, the United States and Europe, domestic environmental protection and production restrictions, etc. may disturb the market rhythm.

Crude Oil Fluctuation: Sharp fluctuations in the cost side of synthetic rubber may indirectly affect the price of natural rubber.

In summary, the current natural rubber market is in a dilemma of "weak reality + weak expectations". Investors are advised to adopt a band operation strategy, mainly shorting at highs in the short term, and focusing on strategic layout opportunities around 14,000 yuan/ton in the medium and long term.

Enterprises need to closely track the progress of inventory liquidation, tire export data and weather changes in major producing countries, and flexibly adjust procurement and hedging strategies.