Natural rubber prices remain high (June 23)
Supply Side: High Raw Material Prices Provide Strong Cost Support
Southern Thailand continues to experience rainfall disruptions, maintaining a latex shortage. In the northeast, production is normal, and processing plants are aggressively buying raw materials, driving cup lump prices to new highs. Thai factories generally have about three months' worth of raw material inventory, with some factories gradually increasing their reserves slightly. Finished product inventory is moderate.
Easing geopolitical tensions in the Middle East have led to expectations of lower energy and shipping costs in Thailand. Dry rubber factories are primarily focused on local orders in Thailand, with factories holding back sales at low prices. Latex factories continue to prioritize overseas and local demand, with a small number of long-term contracts remaining with the Chinese market.
Vietnam's production areas are experiencing intermittent showers, with rainfall concentrated at night, having limited impact on daytime tapping. The continuous nighttime rain has slowed the overall release of raw materials, resulting in a temporary tightness in latex production, with supply recovering to about 50% of normal levels.
In Hainan's production areas, strong winds and persistent high temperatures are hindering tapping operations, slowing the seasonal increase in raw material supply. As expectations for new rubber releases gradually strengthen, local processing plants are cautious about offering higher prices.
Raw material prices in Yunnan's production area rebounded slightly. With futures prices rising, the profit margin for full-latex delivery gradually recovered, giving factories some room to raise purchase prices. In addition, continuous rainfall has impacted rubber tapping, keeping raw material prices high.
Demand Side
As holiday maintenance work concludes, many domestic tire companies have resumed operations, and those that haven't yet resumed production will do so in the next two days, indicating a steady recovery in the industry's overall operating rate. On the demand side, the domestic downstream market is recovering weakly, and shipments through distribution channels are sluggish.
The industry's production mainly relies on overseas export orders. However, the industry still faces multiple constraints: fierce competition due to product homogeneity, frequent international trade frictions coupled with high raw material costs, and high overall production costs. These multiple pressures continue to drag down companies' shipment efficiency and overall profitability.
Market Outlook
In the short term, raw material prices in major producing areas will remain high. Thailand's production region is gradually entering its seasonal peak, with processing plants rushing to acquire raw materials, pushing up costs and limiting downside potential. Furthermore, with current high raw material prices, the losses faced by upstream processing plants are unlikely to improve, maintaining strong cost support in the short term.
From the demand side, tire companies that underwent holiday maintenance have gradually resumed operations, with the remaining companies expected to resume production in the next two days. The industry's operating rate is showing a steady recovery in the short term, and there is a possibility of post-holiday restocking.
However, the pressure on production and sales for most tire companies is unlikely to improve, and factories will continue to flexibly adjust their operating rates based on orders and inventory levels. In the short term, bullish support is relatively strong, and rubber prices are likely to remain high.
Our platform connects hundreds of verified Chinese chemical suppliers with buyers worldwide, promoting transparent transactions, better business opportunities, and high-value partnerships. Whether you are looking for bulk commodities, specialty chemicals, or customized procurement services, TDD-Global is trustworthy to be your fist choice.
