Since the second half of the year, the natural rubber market has maintained a strong upward trend. In early September, domestic spot prices for natural rubber surpassed RMB17,900 per tonne—an increase of approximately 14% since the beginning of the year—marking a high not seen in nearly two years. By September 3, the main contract for Shanghai rubber futures had briefly broken through the 18,800 yuan-per-tonne mark. Amidst continuously rising raw material costs, the downstream tire industry has initiated a new wave of price hikes, resulting in divergent financial performances among listed companies in the sector.
This round of rubber price increases is driven by multiple factors. The Association of Natural Rubber Producing Countries (ANRPC) forecasts that global natural rubber production in 2026 will reach approximately 15.32 million tonnes against consumption of 15.60 million tonnes, resulting in a supply-demand gap of about 280,000 tonnes—a deficit that is expected to widen compared to 2025. Regarding major producing nations, supply is clearly contracting due to a combination of factors: aging rubber trees in Thailand, the spread of leaf fall disease in Indonesia, and anticipated production declines in Vietnam, all compounded by droughts in growing regions caused by the El Niño phenomenon.
Simultaneously, geopolitical tensions have tightened the supply of butadiene—a key raw material for synthetic rubber—driving its price to record highs. Consequently, downstream enterprises have been forced to switch to natural rubber as a substitute, further boosting demand for the commodity.
Cost pressures are rapidly being passed down the supply chain. Since the start of 2026, numerous tire manufacturers—including Michelin, Bridgestone, ZC Rubber, and Sailun Tire—have issued a flurry of price hike notices, with increases generally ranging from 2% to 5%. Both foreign brands and leading domestic companies have adjusted prices in tandem, indicating that this cost shock is affecting the industry across the board.
In its price adjustment notice, ZC Rubber stated that the magnitude of the price increases remains far below the rise in costs, noting that it is also engaging in futures hedging for natural and synthetic rubber. Sailun Tire indicated that it aims to minimize procurement costs by establishing strategic partnerships and long-term contracts with raw material suppliers, while also adjusting procurement strategies in a timely manner to improve the accuracy of market forecasts. Furthermore, the company plans to mitigate the adverse effects of rising raw material costs by adjusting product prices and increasing the sales proportion of high-value-added tires.
Half-year reports disclosed by listed companies reveal significant disparities in their respective abilities to withstand these cost shocks. Leading enterprises such as Zhongce Rubber and Sailun Tire achieved growth in both sales volume and prices during the first half of the year, whereas companies like Linglong Tire and Qingdao Double Star continued to face pressure on their core businesses.
Regarding the future trajectory of rubber prices, various brokerages and market intelligence agencies believe that the tight supply-demand balance will continue to support a strong price trend, though the room for further upside remains limited.
Recent monitoring by SunSirs indicates that natural rubber is currently in a state of "resistance to decline," highlighting bullish characteristics; however, with prices already hovering near one-year highs and limited upward potential, there is a need to guard against volatility risks at these elevated levels.
Southwest Futures suggests that the natural rubber market is currently characterized by a tug-of-war between strong expectations and weak reality. On the supply side, frequent rainfall during the peak production season has hindered raw material output, while inverted processing margins continue to constrain production elasticity; furthermore, the confirmed El Niño event—of historically rare intensity—has made the expectation of reduced output a central theme for the second half of the year and into next year. On the demand side, tire plant operating rates remain weak year-on-year and finished product inventories are high, meaning the anticipated peak season surge has yet to materialize in terms of orders.
Guotai Junan Futures indicates that cyclical output reductions in major producing regions point toward a long-term upward price trend, with natural rubber prices expected to show a volatile yet generally strong performance in the second half of the year. Industrial Securities predicts that the natural rubber market in 2026 will be characterized by "rising price baselines and heightened volatility." While a long-term decline in global natural rubber production capacity is underway, short-term supply elasticity remains; should increased heavy-duty truck consumption be confirmed in the second half of the year, the upward price elasticity for rubber could exceed that of 2025.
However, some institutions remain cautious regarding the recovery of downstream profitability. China Tire Business Network analyzes that as new production capacity comes online and international trade barriers intensify, market competition will become fiercer, leaving significant uncertainty regarding the industry's overall profit recovery. Michelin forecasts a revenue rebound in the second half of 2026, though rising raw material costs could slightly weigh on its operating profit margin.
In summary, driven by the interplay of production capacity cycles and climatic disruptions, natural rubber prices lack the conditions for a significant short-term correction; meanwhile, tire companies continue to face mounting pressure regarding cost pass-through and market competition. Leading enterprises—characterized by overseas production capacity, optimized product mixes, and economies of scale—may further consolidate their dominant positions during this round of industry consolidation. (Source: Securities Times)
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