SunSirs: China Natural Rubber Market Trends Upward with Fluctuations in August

The natural rubber market trended upward with fluctuations in August. Data from SunSirs shows that as of August 27, the spot price for natural rubber in my country stood at approximately 17,791 RMB/tonne, a 7.94% increase from the 16,483 RMB/tonne recorded at the beginning of the month. The market saw an intense tug-of-war between bulls and bears; while raw material costs provided support, weak downstream demand constrained the extent of price gains.

Although Southeast Asia has entered the peak tapping season, rainfall has disrupted tapping schedules, causing raw material output to fall short of expectations; consequently, the price of Thai cup lump rubber has remained high at 70 THB/kg. In domestic production areas like Hainan and Yunnan, excessive rainfall has prompted processing plants to rush for raw materials, resulting in tight spot supplies.

Inventory levels saw a slight decline; as of August 23, the combined bonded and general trade natural rubber inventory in the Qingdao region stood at 631,500 tonnes—a drop of 1.65%. While this marks a continuing slight destocking trend, the volume of overseas arrivals is increasing, and absolute inventory levels remain high.

The tire industry is currently in its traditional off-season. Operating rates for sampled enterprises stood at 64.15% for all-steel tires and 65.81% for semi-steel tires (with the latter down 6.06% year-on-year). Downstream enterprises are primarily purchasing to meet immediate needs and show little willingness to actively restock, facing significant resistance to high-priced transactions. While the market is pricing in expectations for the "Golden September, Silver October" peak season, terminal orders have yet to show substantial improvement, making it difficult to drive a sustained surge in rubber prices.

Market Outlook:

From a technical perspective, rubber prices rebounded from late July lows, showing strength in the short term. After a sufficient earlier correction and bottoming out, there is ample momentum for a short-term rebound. However, resistance exists at the previous fluctuation range, making an immediate breakout unlikely. Prices are expected to trend upward with fluctuations; if the price stabilizes above short-term moving averages, there is room for further gains. Conversely, if it falls below the 10-day moving average, it will re-enter a period of consolidation, requiring close attention to the effectiveness of moving average support.

Fundamentally, natural rubber prices are expected to fluctuate within a high range in the short term. Constrained by current demand realities, there is limited room for an upward breakout; conversely, support from raw material costs limits the downside. Key factors to monitor include weather conditions in Southeast Asia, tire manufacturing operating rates, and inventory fluctuations in Qingdao. Should rainfall persist in production regions, prices could experience a temporary spike.

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