SunSirs: China Domestic Natural Rubber Market Weakens Amid Fluctuations Since Late July

Since late July, the domestic natural rubber market has weakened amid fluctuations. While weak demand during the off-season has exerted downward pressure, weather disruptions in production regions have provided a floor for prices; consequently, although natural rubber prices have trended lower, the decline has been limited. The overall price level has continued to shift downward. Data from SunSirs indicates that as of July 31, the spot price for natural rubber in my country stood at approximately 16,483 RMB/tonne, a 1.64% drop from the 16,758 RMB/tonne recorded on July 21.

In late July, persistent heavy rainfall and cloudy, low-sunlight conditions in domestic production regions significantly reduced the number of days suitable for tapping and lowered latex flow efficiency. Monthly output of domestically produced standard rubber (SCR5) remained low, failing to provide effective short-term replenishment for the domestic spot market and further intensifying reliance on overseas supplies.

Frequent rainfall across Southeast Asia in late July disrupted tapping operations and delayed the peak arrival of new overseas rubber, temporarily easing domestic inventory accumulation pressure; consequently, inventories at Qingdao Port saw only a slight increase. Data shows that as of July 26, combined bonded and general trade natural rubber inventories in the Qingdao region totaled 668,100 tonnes, up 0.1% month-on-month.

The tire industry has entered its traditional off-season for maintenance, leading to a continued decline in capacity utilization rates. In late July, the operating rate for all-steel tires in Shandong was 62%, while the national operating rate for semi-steel tires stood at 58%. Finished product inventory levels at tire manufacturers exceeded 40 days of supply; with slow inventory depletion at the retail end and low willingness to restock raw materials, enterprises are maintaining a "purchase-on-demand" strategy.

From a fundamental perspective, natural rubber prices are expected to remain weak and volatile in the short term. Maintenance activities at tire manufacturers will continue into early August, and with no clear signs of a demand-side recovery, rubber prices are likely to maintain a weak, fluctuating trend. Medium- to long-term market performance will hinge on marginal changes in supply and demand: on the supply side, monitoring weather patterns in Southeast Asia to verify expectations of supply contraction due to El Niño-induced drought; on the demand side, closely tracking the pace of work resumption in the downstream tire sector and the strength of the "Golden September, Silver October" peak season recovery.

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