Natural Rubber Price Rises Post-Holiday
Introduction: With the Spring Festival holiday over, businesses are gradually resuming work and production. Driven by positive external macroeconomic sentiment, futures prices rose sharply, and spot offers followed suit, resulting in an upward adjustment in natural rubber spot prices, marking the first major price increase after the holiday.
1. Global Supply Enters Low Production Period, Raw Material Support Remains Strong
Regarding global supply, the overall supply of natural rubber is gradually entering its low production period. Looking at different producing regions, domestic production areas are currently in the off-season, with no domestic supply.
The tightness of domestic raw material supply is increasing, and factory purchase prices are currently unavailable. In major overseas producing areas, due to seasonal changes, except for a small amount of production in southern Thailand, the main producing areas in northeastern Thailand and Vietnam have entered the off-season in mid-to-late February.
Global natural rubber production is at its lowest point of the year, with limited overall raw material output. Coupled with the competitive bidding among rubber processing plants due to stockpiling during the low production period, raw material prices are more likely to rise than fall. Supply and cost factors provide strong support for rubber prices.
2. Tire Manufacturers Resume Production, Operating Rates Improve
Before the Spring Festival, the all-steel tire market remained under seasonal pressure. Some companies suspended operations at the end of January, while most gradually suspended operations between the 20th and 23rd of the twelfth lunar month, a pace largely unchanged from previous years.
Semi-steel tire manufacturers, supported by concentrated production of European orders, delayed their holiday plans, mostly suspending operations between the 25th and 28th of the twelfth lunar month. Looking ahead to the post-holiday period, stimulated by promotional policies and sales targets, dealers will replenish their inventory in stages, leading to a short-term rebound in shipments.
Coupled with the post-holiday production recovery cycle, tire inventory will likely see channel depletion in the short term. However, end-user replacement demand remains constrained by logistics, the pace of infrastructure resumption, and consumer wait-and-see sentiment. Substantial end-user demand will gradually be released after March, while OEM demand will also await a full recovery in automobile production and sales.
3. Strong Macroeconomic Atmosphere, Significant Tariff Impact
During the Spring Festival holiday, the U.S. Supreme Court ruled that President Donald Trump's tariff policies were illegal, prompting close international attention to Washington's next move. Subsequently, according to the U.S. Embassy in China, President Trump signed executive orders on February 20-21, announcing additional global tariffs on imported goods from multiple countries, raising the rate from the initially announced 10% to 15%, on top of existing conventional tariffs.
According to information posted by Trump on social media, the basis for these tariffs includes Section 232 of the Trade Expansion Act and Section 301 of the Trade Act of 1974. The new tariffs will be levied in addition to existing national security tariffs and trade remedy tariffs.
4. Market Outlook: Strong Supply and Demand Support Fuels Bullish Sentiment for Rubber Prices
Following the holiday break, Thai raw material prices remained strong, providing robust cost support for rubber prices. Simultaneously, as downstream enterprises gradually resume operations, the demand for natural rubber is expected to recover, leading to a gradual warming of market activity and providing bullish support for rubber prices. However, frequent news regarding the external macroeconomic environment and policies has resulted in a cautious market sentiment.
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