Rubber prices are expected to weaken
Market Review: Recent increased rainfall in domestic and international rubber-producing areas has temporarily hampered the release of new rubber, limiting further declines in raw material prices and increasing cost support. Following the previous price drop, tire manufacturers replenished their stocks faster than expected, potentially leading to concentrated deliveries this week, which may alleviate inventory pressure at Qingdao Port.
However, weak end-user demand and continued production controls by some downstream companies have resulted in insufficient upward momentum for the natural rubber market, hindering sustained price increases.
Supply Side: Seasonal production increases weaken cost support
International Producing Areas: Raw material supply in Thailand is entering a seasonally increasing month-on-month phase, with processing plants continuously pushing down raw material purchase prices, leading to a wide decline in raw material prices. However, this week, heavy rainfall in Thailand temporarily limited the tapping pace, causing raw material prices to stabilize after a week of decline.
Increased rainfall in Vietnam's rubber-producing regions has led to a relatively stable supply of raw materials, placing the region in a seasonal production surge. However, the increased supply of raw materials coupled with a weakening futures market has resulted in cautious purchasing behavior at processing plants in the producing areas.
The willingness to lower prices for rubber remains strong, while demand for cup lump rubber has remained relatively stable, with prices showing resilience. Factory production remains focused on concentrated latex production lines, while dry rubber production lines have seen a slight recovery in operating rates, but overall remain at a low level.
Domestic producing areas: At the beginning of the week, rainfall in Yunnan's rubber-producing areas hampered new rubber production, leading to a relatively strong mainstream raw material purchase price. Towards the end of the week, the rainfall improved, and new rubber production gradually resumed. Mainstream raw material purchase prices remained relatively stable, with lower-end prices slightly increasing.
In Hainan's rubber-producing areas, continued rainfall limited tapping operations, resulting in limited available raw material supply. Overall, the spot market saw relatively weak purchasing sentiment, with local processing plants making limited purchases and resulting in limited fluctuations in raw material purchase prices.
On the demand side, the operating rate of China's semi-steel tire manufacturers is 65%. The operating rate of China's all-steel tire manufacturers is 64%. Tire operating rates improved slightly this week compared to the previous week. Companies that underwent long maintenance shutdowns at the beginning of the week have resumed operations as planned, and production is gradually recovering. However, considering the current raw material and order situation, most companies are maintaining their previous production control measures.
However, the end of this week coincides with the beginning of July, and a small number of companies in Dongying and Weifang have maintenance schedules, including semi-steel and all-steel tire manufacturers, mostly for 3-5 days, with some maintenance periods being longer. This will somewhat delay tire product supply at the beginning of the month.
Looking ahead, both domestic and international production areas are in the early stages of tapping, and new rubber production remains insufficient to meet demand. With high demand for finished products, processing plants are actively replenishing their stocks, supporting high raw material prices and providing strong cost support.
This cost support has led to a significant increase in spot prices. However, after spot prices reached new highs, downstream companies' overall sales performance has been lackluster, and actual buying interest has cooled. In the short term, the natural rubber market is experiencing a clear battle between bullish and bearish sentiment, with rubber prices showing a wide-ranging but slightly bullish trend.
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