Natural Rubber Q3 2025 Review

1. Natural Rubber Market Price Review and Analysis

Natural rubber prices remained largely volatile at high levels in the third quarter of 2025. In July, positive macroeconomic and external factors, including the implementation of anti-involutionary measures, drove up commodity prices, including rubber. This, coupled with clashes on the Thai-Cambodian border, pushed rubber prices to recent highs. As these positive factors were gradually absorbed, rubber prices saw some price correction at the end of the month. Fundamentals suggest a mixed bullish and bearish outlook. Rainfall and other factors disrupted rubber tapping in major producing areas, leading to relatively high raw material prices. Furthermore, the gradual resumption of production at tire companies following maintenance operations has slightly increased tire operating rates.

However, Qingdao inventories, impacted by cargo volume, showed monthly accumulation. Weather impacts in producing areas subsided in August, and increased supply pressured raw material prices. However, continued geopolitical conflicts overseas hindered rubber tapping, limiting the decline in raw material prices. Coupled with the significant decline in rubber prices at the end of July, downstream tire companies actively restocked, driving a destocking of Qingdao port inventories and boosting rubber prices to a rebound. Heavy rainfall continued in producing regions into mid-August, limiting the release of new rubber, driving up raw material purchase prices and supporting rubber prices from the cost side.

Overseas cargo arrivals continued to be low, leading to a rebound in delivery volumes from end-user tire manufacturers and a significant destocking of natural rubber spot inventories, boosting market confidence and strengthening the upward trend in rubber prices. Continued rainfall and typhoons in overseas producing regions in September continued to disrupt the supply side, leading to continued increases in overseas raw material prices and significant cost support.

However, subsequent rainfall disruptions in overseas producing regions weakened month-over-month, and factories were reluctant to increase purchase prices, lacking further momentum for raw material price increases. Combined with the impact of market sell-offs and the anticipated realization of a Federal Reserve rate cut, the market over-invested in previously positive news, and rubber prices began to weaken.

2. Natural Rubber Supply Review and Analysis

Thailand: In July, overall raw material supply in Thailand steadily increased. However, due to weak demand for concentrated milk, glue prices continued to fall. Dry glue mills continued to increase prices to compete for raw material production, narrowing the price gap between cups and water. In late August, heavy rainfall continued to disrupt rubber tapping in some areas, causing a continued rise in raw material prices. Second-hand dealers shipped their goods, leaving factories with little pressure on raw materials.

Thai rubber prices remained generally high and firm in August. Improved weather in Thailand's producing areas at the beginning of the month led to increased supply, significantly pressuring raw material prices. However, geopolitical conflicts persisted, impacting rubber tapping in some areas. Factories increased their purchase prices for raw materials, maintaining a strong price trend. Rainfall gradually increased in Thailand mid-month, affecting some producing areas in northeastern and southern Thailand.

Cambodian workers reportedly remained at home, prompting factories to increase prices for raw materials, leading to a continuous increase in raw material prices. However, weak demand for the rubber sector limited price increases. Thai rubber prices remained generally high and firm in September, with a slight weakening at the end of the month.

A new typhoon arrived in Thailand at the beginning of the month, bringing heavy rains that disrupted rubber tapping and caused flooding in parts of northern Thailand. This tightened raw material supply, forcing factories to purchase at high prices, and the average price of raw materials continued to rise.

Rain disturbances in northeastern Thailand weakened month-over-month in mid-month, leading to a slight improvement in new rubber release. Factories showed no willingness to increase prices, and the price of cup rubber, a raw material, lacked momentum for further price increases, resulting in a month-over-month decline in average prices.

Vietnam: In July, localized rainfall disturbances persisted in parts of Vietnam's producing areas, but overall supply showed a stable growth pattern. Raw material prices diverged. Due to weak orders and profits, the purchase price of rubber was relatively weak, but the price of cup rubber gradually rose.

This was primarily due to low raw material inventories at No. 10 rubber (TSR) processors, driven by strong demand for restocking. Favorable weather conditions in Vietnam's producing areas in August led to a steady seasonal increase in raw material supply. Boosted by a rebound in finished product prices, No. 10 rubber processors increased raw material purchases, leading to a slight increase in cup rubber prices. Meanwhile, improved orders for light-colored rubber also supported the firming of rubber prices. Weather improved in Vietnam's producing areas in September.

While tapping operations were disrupted by intermittent rainfall, raw material supply remained tight, but output showed a slow recovery. Processors actively procured raw materials to secure orders, supporting stable and slightly strong prices.

Heavy rainfall in Yunnan's production areas in July reduced glue output, creating significant difficulties for processing plants in acquiring rubber. Concentrated milk plants significantly reduced production due to raw material shortages, resulting in fewer new orders from downstream suppliers and production focused on fulfilling pre-orders. Standard rubber plants operated at low capacity due to a shortage of glue, with some reporting operating at only around 10%. Tire rubber production remained largely normal. Heavy rainfall in the production areas in August further tightened glue supplies, increasing difficulties for processing plants in acquiring raw materials. Some concentrated milk plants reduced production capacity, refusing to accept new orders and focusing on fulfilling pre-orders. To maintain normal production, standard rubber plants increased prices to purchase raw materials, keeping raw material prices firm. Weather conditions in the production areas remained favorable in September, resulting in stable glue output and a slight decline in raw material prices, along with falling futures and spot prices.

In July, Hainan's rubber production areas were frequently disrupted by typhoons, heavy rain, and other weather factors, hindering tapping and slowing the release of new rubber production on the island. Combined with the impact of previous typhoons damaging rubber trees, overall rubber production remained below previous year levels, failing to meet the production needs of various processing plants. Furthermore, boosted by rising futures and spot prices, some local processing plants increased their willingness to purchase raw materials at higher prices, driving up raw material purchase prices. While weather conditions in the production areas were favorable in August, rainfall was low in some areas, and high temperatures persisted, somewhat dampening the growth of fresh rubber production. With spot prices rebounding, local processing plants accelerated their destocking efforts, significantly increasing their demand for raw material replenishment, which in turn drove up raw material purchase prices. In September, weather conditions improved, and raw material production and release gradually resumed normal. However, due to weak orders and profits, local processing plants declined their enthusiasm for replenishing their high-priced raw materials, resulting in a decline in raw material purchase prices.

3. Review and Analysis of Natural Rubber Imports

According to customs data, China's imports of natural rubber (including technically classified rubber, latex, smoked rubber sheets, primary forms, mixed rubber, and compound rubber) reached 520,800 tons in August 2025, a 9.68% month-on-month increase and a 5.39% year-on-year increase. For the period from January to August 2025, the cumulative import volume reached 4,121,400 tons, a cumulative year-on-year increase of 19.47%.

According to customs data, China's exports of natural rubber (including technically classified rubber, latex, smoked rubber sheets, primary forms, mixed rubber, and compound rubber) reached 6,000 tons in August 2025, a 1.86% month-on-month increase and a 15.3% year-on-year decrease. For the period from January to August 2025, the cumulative export volume reached 66,400 tons, a cumulative year-on-year increase of 24.2%.

4. Review and Analysis of Natural Rubber Demand

In July, orders for semi-steel tire manufacturers improved slightly. Coupled with reduced maintenance, production schedules improved compared to the previous month. To control inventory increases, the recovery in operating rates was limited.

Tensions in the Middle East during the month affected all-steel tires, leading to a significant decline in foreign trade orders for some companies. Some companies underwent maintenance at the beginning and end of the month, coupled with high finished product inventories. Some companies curbed production to reduce inventory, resulting in a decline in overall tractor operating rates. While transaction prices in the semi-steel tire market remained generally stable in August, some dealers engaged in independent promotions based on their own inventory levels. 

Some dealers, with larger sizes in stock, offered room for negotiation, such as volume-based pricing, solely to increase shipments. Furthermore, domestic snow tire dealers began stocking up, with purchase prices lower than last year. Channels showed little enthusiasm for purchasing, with inquiries primarily in the short term. Overall, all-steel tire production maintained a narrow upward trend. Entering August, market prices remained generally stable. At the end of July, some brands announced plans for price increases for the new month, aiming to recover a previous 2% discount.

However, surrounding companies showed no signs of following suit. Many companies were out of stock of economy tires, leading to market shortages as well, which in turn led to a partial recovery in operating rates for some companies. At the beginning of September, some companies in Dongying had scheduled maintenance for 3-4 days, leading to a decline in overall tractor operating rates. Maintenance companies have gradually resumed operations, with shipments performing generally well, and inventory levels varying somewhat. Most tire companies maintained their previous operating levels mid-month, though some still face stockouts.

Domestic orders for semi-steel snow tires are currently concentrated during the production period, with some companies moderately increasing production, providing some support for overall production. Towards the end of the month, most tire companies maintained their previous operating levels, building up post-holiday inventory. Overall production saw minor adjustments. Some small-scale semi-steel tire companies, due to insufficient orders, entered maintenance early for the National Day holiday, slightly dragging down semi-steel tire production.

5. Inventory

In July, total warehouse inventory in Qingdao shifted from a destocking trend to an accumulation trend. Total spot inventory at Qingdao Port showed a slight accumulation, with bonded warehouse inventory continuing to decline and general trade inventory showing an accumulation. Overseas cargo arrivals at Qingdao Port remained relatively low, while outbound shipments were mostly pre-ordered. Following a sharp rise in rubber prices, retailers remained cautious, resulting in lower-than-expected outbound shipments and a slight increase in total spot inventories at Qingdao Port.

Qingdao's inventory continued to decline in August, with overseas cargo arrivals remaining relatively low and the overall inbound rate declining month-over-month. A pullback in natural rubber spot prices stimulated downstream tire companies to restock at low levels, leading to stronger buying sentiment compared to the previous period and a month-over-month increase in outbound shipments.

Qingdao's total spot inventory showed a decline, primarily concentrated in general trade warehouses. Qingdao's inventory continued its decline in September. At the beginning of the month, total port inbound shipments decreased month-over-month, but downstream companies engaged in moderate restocking, increasing outbound shipments from port warehouses and continuing to decline port inventories. 

Mid-month, downstream companies focused on standard rubber, driving an increase in outbound shipments from bonded warehouses, resulting in a larger-than-expected decline. At the end of the month, overseas cargoes arrived in concentrated quantities to avoid holidays. Qingdao warehouses saw a significant increase in incoming cargo, and the increase in mixed cargoes exceeded expectations. Qingdao port inventories continued to decline, though the rate of decline narrowed compared to the previous period.

6. Market Outlook

On the supply side, major overseas production areas are gradually entering a period of increased production. Qingdao inventories continue to show seasonal destocking, but the rate of decline remains weaker than last year. Overall performance of tires at the terminal market is unlikely to improve significantly, with sample tire companies maintaining their previous purchasing pace.

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