Natural Rubber Weekly Report
1. Rubber Spot Market Analysis
This week, natural rubber prices trended downwards. With domestic rubber-producing areas fully commencing tapping, coupled with favorable growth of rubber trees overseas, market supply pressure is gradually becoming more prominent, and this is expected to be a key factor dominating market trends. In the short term, the natural rubber market is caught between cost support during the overseas off-season and supply pressure from the domestic tapping season, limiting upward potential and potentially leading to a gradual downward shift in the price center.
This week, spot prices for natural latex generally declined, with futures prices continuing to fall. Meanwhile, the upcoming tapping season in Yunnan, China, has led to bearish market sentiment. Some traders have lowered their spot prices, but currently, profit margins are inverted between domestic and international markets, and macroeconomic and geopolitical risks are still unfolding. Some traders are reluctant to sell at lower prices, and downstream product manufacturers are mainly adopting a wait-and-see attitude, with limited actual buying interest.
Market Forecast:
1. With domestic tapping about to begin, cost support may decline further;
2. The operating rate of sample tire manufacturers is expected to increase next cycle;
3. Inventory in Qingdao, China, continues to decline;
4. Exchange rates, Fed rate cuts, etc.
2. Natural Rubber Supply Analysis
2.1 Thailand Production Area
During the period, raw material procurement prices in Thailand continued to rise, with a significant price difference maintained. Thailand is generally in a state of seasonal shutdown for rubber tapping, resulting in a tight supply of raw materials. Factories have restocking needs, driving up procurement prices. Factory raw material inventories are generally around 2-3 months, lower than the same period last year. Finished product inventories at factories are generally low during the shutdown period, with shipping dates until August/September.
2.2 Vietnam Production Area
This week, Vietnam's rubber production area is still in its seasonal shutdown period, with no new adjustments to the tapping schedule. Tapping is expected to gradually resume from the end of March to the beginning of April. Due to Laos's early trial tapping, a small amount of Lao raw materials have flowed into Vietnam, alleviating the pressure of tight local raw material supply to some extent.
2.3 Yunnan Production Area
This week, in Yunnan's production area, tapping has not yet begun in the Jiangcheng area of Pu'er, while tapping has gradually started in the Menglian area and the Mengding area of Lincang. Tapping has not yet begun in the Lüchun area of Honghe, and tapping has started in a small area of Xishuangbanna. Farms in the Mengla area have not yet announced specific tapping times, but some areas with good leaf growth have already started tapping. It is expected that most areas of Mengla will begin tapping soon. In the Damenglong area, only a small number of trial taps have been conducted so far. Xishuangbanna has experienced intermittent rainfall recently, and large-scale tapping is expected around the 20th.
2.4 Hainan Production Area
The rubber trees in the Hainan production area are growing relatively well. Some areas are experiencing drought and powdery mildew, but overall the impact is not significant. The expected tapping start is currently in line with seasonal trends. According to surveys, some rubber plantations in the southern Lingshui and Baoting areas, as well as some sunny areas of Baisha on the western route, entered the trial tapping stage this week. The yield is very limited, and collection is mainly in cup lump form. It is expected that the Hainan rubber-producing area will officially begin tapping from south to north by the end of March, with large-scale tapping in the main rubber-producing areas of the western and central routes expected after the Qingming Festival.
3. Analysis of Natural Rubber Cost and Profit Situation
3.1. Overseas Producing Areas: Thailand
The theoretical production profit of Thai STR20 rubber increased compared to the previous period. During the period, the price of raw material cup lump continued to rise, resulting in significant cost pressure. Arbitrageurs showed weak willingness to increase their positions, and buying interest was generally low. Factories mostly sold at low prices, leading to a larger-than-expected loss in the theoretical production profit of Thai standard rubber.
3.2. Domestic Producing Areas: Hainan
Natural rubber in Hainan is currently in its off-season; local processing plants are operating at low capacity, but are mainly using raw materials stockpiled in advance for the off-season.
4. Analysis of Natural Rubber Demand
4.1. Downstream Dry Rubber
The operating rate of semi-steel tires in China is 79%. The operating rate of all-steel tires in China is 72%.
Downstream operating rates increased slightly during the period. Driven by price increases, companies concentrated their shipments, resulting in significant shortages and supporting the overall operating rate. To meet supply demands, some companies have slightly increased their output.
4.2 Downstream of Concentrated Latex Gloves
It is understood that the average operating rate of glove factories in North China is roughly 50-70%, with differences between large and small factories. Recently, due to escalating geopolitical risks, the prices of chemical raw materials have risen sharply, increasing production cost pressures on factories. Consequently, factories have successively raised the prices of finished gloves.
Driven by a "buy high" mentality, end-users and distributors have accelerated their procurement, resulting in relatively good sales for factories. Furthermore, due to significantly narrowed profit margins in nitrile glove production, some companies are considering expanding their natural latex glove production lines. Currently, the tapping season for natural rubber in domestic producing areas is about to begin, and factories are generally cautious about purchasing raw materials at current prices.
The operating rate of foam factories in Wenzhou is roughly 40-50%. Pre-holiday finished product inventories still need to be digested, but new orders after the holiday are low, resulting in a slow inventory digestion pace. Currently, raw material inventory levels are not high, and the factories face cost pressure from the general rise in chemical raw material prices.
Affected by factors such as consumer expectations, the market acceptance of the price increase for finished products was low, hindering shipments. Therefore, factories are currently mainly focused on clearing finished product and raw material inventories. With the recent decline in concentrated rubber prices, market sentiment has eased somewhat, and some customers are showing purchasing intentions.
5. Natural Rubber Price Spread Chart
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