Sunsirs: Global Natural Rubber Market Continues to Strengthen

This week, the international natural rubber market has strengthened across the board, with rubber futures and spot prices at major exchanges all showing increases to varying degrees. Among them, the Thai 3# natural rubber and the rubber futures at the Tokyo Commodity Exchange (TOCOM) in Japan saw the most significant month-on-month gains, reaching 4.08% and 3.96%, respectively. Compared to the same period last year, all varieties have achieved substantial increases, with the Japanese rubber futures seeing a year-on-year increase of over 50%, indicating strong market demand and tight supply.Looking at the specific market performance, the average price of SICOM 3# natural rubber futures this week was reported at 218.200 US cents/kilogram, up 0.58% month-on-month and a significant 44.86% year-on-year. The highest price this week reached 222 US cents/kilogram, setting a recent high. The average price of Singapore TSR20 natural rubber was reported at 171.680 US cents/kilogram, up 1.81% month-on-month and up 30.59% year-on-year. The performance of TOCOM 3# natural rubber futures was strong, with an average price of 303.033 yen/kilogram, up 3.96% month-on-month and up 51.11% year-on-year. The highest price within the week was reported at 307.5 yen/kilogram, with the lowest at 291.2 yen/kilogram. The average price of Thai 3# natural rubber was reported at 80.580 baht/kilogram, up 4.08% month-on-month and up 40.48% year-on-year. The price of Indonesian produced 1# natural rubber was relatively stable, with an average price of 124.625 US cents/pound, up 0.50% month-on-month and up 18.69% year-on-year. The average price of natural rubber futures at the Shanghai Futures Exchange (SHFE) in China was reported at 14,542.500 yuan/ton, up 0.62% month-on-month and up 20.16% year-on-year. The highest price within the week was reported at 14,620 RMB/ton, with the lowest at 14,450 yuan/ton. Overall, the prices of the world's major natural rubber markets have continued to rise, with year-on-year increases generally exceeding 20%, reflecting the continued improvement in the global natural rubber market.

The price of natural rubber has continued to strengthen this week, mainly driven by multiple factors: First, from a fundamental perspective, the global supply of natural rubber continues to be tight. The main producing countries in Southeast Asia, including Thailand, Indonesia, and Malaysia, are entering a seasonal period of reduced production. In addition, some production areas in southern Thailand have been affected by unfavorable weather, which has limited tapping activities and reduced production. Data from the Thai Rubber Authority (RAOT) shows that the production of raw rubber in Thailand has decreased by about 8% year-on-year in the first four months of this year, and inventory levels are at the lowest level in the past five years. Second, the global demand for tires and the automotive industry has recovered significantly. The latest data shows that the production and sales of automobiles in our country have maintained double-digit growth for three consecutive months, and there are signs of a recovery in car sales in the European and American markets, which has led to an increase in the purchase of raw materials by tire manufacturers.

Data released by the China Rubber Industry Association shows that the production of tires in our country increased by 12.6% year-on-year in the first quarter, and the export volume increased by 9.8%, setting a historical record for the same period. Third, the continuous high operation of crude oil prices supports the cost of synthetic rubber, indirectly pushing up the price of natural rubber. At the beginning of this month, Brent crude oil once broke through the $84/barrel mark, reaching a five-month high. The rise in crude oil prices has led to an increase in the cost of synthetic rubber, and some downstream enterprises have turned to the purchase of natural rubber, further exacerbating the tension in market supply and demand. Fourth, the rise in international shipping costs has pushed up the price of rubber. Affected by the geopolitical risk in the Middle East, the crisis in the Red Sea shipping has continued to ferment, and the international shipping rate has increased significantly, increasing the transportation cost of rubber from Southeast Asia to Europe, America, and our country by about 20-30%, further pushing up the arrival price of rubber. Fifth, the good policy face in our country has boosted market confidence. Recently, our country has introduced a series of policies to promote car consumption, including increasing the promotion of new energy vehicles and encouraging the exchange of old cars for new ones. These policies are expected to further stimulate the demand for the automotive market, indirectly driving the consumption of rubber. Sixth, the inflow of investment funds has pushed the futures market to strengthen. Under the expectation of global inflation, commodities, as a hedging tool, have attracted a large amount of speculative capital to flow in. The number of rubber futures contracts on the Singapore Commodity Exchange (SICOM) and the Shanghai Futures Exchange (SHFE) have both increased significantly compared to the beginning of the year, and the capital face supports and promotes the rise in prices. Finally, the global economic recovery is looking good, especially the performance of economic data in the United States and our country has exceeded expectations. The April manufacturing PMI in the United States has rebounded above 50, returning to the expansion zone; the April export growth in our country has increased by 7.8%, better than market expectations, the improvement in economic fundamentals has led to an increase in demand for industrial raw materials. Looking ahead, the natural rubber market is expected to maintain a strong pattern due to factors such as tight supply, demand recovery, and cost support. However, attention needs to be paid to potential impacts on the market from global economic prospects, adjustments in monetary policies of various countries, and production increase plans of major producing countries.

As an integrated internet platform providing benchmark prices, On September 1st, the benchmark price of natural rubber by SunSirs was 14,966.67 RMB per ton, an increase of 1.81% compared with the beginning of last month (14,700.00 RMB per ton).

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