Market remains cautious amidst Middle East tensions and supply dynamics

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Market sentiment was "Slightly Bearish" - Helixtap sentiment tracker

Recent geopolitical developments have created a cautious atmosphere in rubber markets, with a fragile ceasefire in the Middle East affecting buying activities. Prices remain range-bound due to balanced fundamentals, while supply dynamics from key regions influence market sentiment.

Shaky Ceasefire and Market Response

A ceasefire in the Middle East was announced by US President Donald Trump, but initial hopes were dashed as violations occurred almost immediately. Market players remained hesitant amid this uncertainty, leading to a slowdown in consumer buying activities. Following Trump's announcement, futures markets fell, tracking a 7% decline in oil prices while the US dollar weakened against the yen. This trend extended to synthetic rubber prices, while in the later hours, concerns over escalating conflicts between Iran and Israel heightened. As the day progressed, accusations and mutual attacks between Iran and Israel further destabilized the situation, leaving market participants on edge.

Asian Trading Day: Cautious Sentiment Prevails

During the Asian trading day, cautiousness reigned as buyers adopted a wait-and-see approach amidst balanced market fundamentals. With neither significant oversupply nor undersupply present, prices remained within a narrow range and limited trades were done. Although there was relief that the threat of Iran closing the Strait of Hormuz might diminish with the cessation of hostilities, the lingering uncertainty cast shadows over this optimism in trade markets. Traders began reporting congestion at Far East Asian ports, impacting logistics that can potentially lead to heightened commodity prices, including rubber.

Impact of Flash Floods on Thai Rubber Production

Flash floods in Thailand ended a second consecutive decline in Japan rubber futures on Monday, as fresh weather concerns took center stage. From June 24–27, the monsoon trough will lie across northern and northeastern Thailand, bringing widespread rain and isolated heavy to very heavy showers, particularly in the upper Northeast, East, and the South’s west coast. This can disrupt tapping and transport temporarily, even as raw material flow is resuming in key producing areas. However, with demand still weak, prices are unlikely to rise significantly.

Supply Dynamics from Key Regions

Reports indicate ample rubber supply from Indonesia, while the Ivory Coast is starting offering cargoes for July and August. However, supply constraints from Vietnam have led to elevated prices that have surprised market players. SVR10 was quoted at US$1680-1690/mt, closely aligning with STR20 prices. Other notable pricing included SIR20 at US$1600-1615/mt FOB and AFR10 at US$1580/mt FOB. Notably, SIR20 transactions were reported at US$1605/mt FOB for August and US$1610/mt for September delivery.

Chinese Market's Global Influence

China's duty-free status for Ivory Coast rubber presents an advantage for both suppliers and Chinese importers, resulting in cargo scarcity for buyers in other regions at cheaper levels. Over the past decade, significant Chinese investment in Africa has opened avenues for the rubber trade, particularly as Chinese and Thai companies expand their presence within the African market. This scenario may tilt international trade dynamics, influencing pricing and availability in rubber.

Spot vs Futures Price Differentials
 

Over the past 20 days, the price differentials of spot rubber prices for STR20, SIR20, and AFR10 compared to TSR20 have exhibited notable fluctuations. STR20 has shown a downward trend, dropping from a differential of 155 to 74, reflecting a significant decline. In contrast, SIR20 fluctuated around a negative differential, with its most recent price at -4, while AFR10 experienced a rise in its differential, peaking at 55 before declining to a recent level of -1. Overall, while AFR10 has maintained a more resilient position, STR20 and SIR20 display concerns regarding price stability.
 

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Continued Demand Weakness Affects Rubber Prices Amid Geopolitical Tensions

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Market sentiment was "Slightly bearish" - Helixtap sentiment tracker

The rubber market faces ongoing price corrections during the Asian trade day due to weak demand and geopolitical uncertainties, especially in the Middle East. Limited buying from tiremakers, increased inventories, and easing supply conditions also contributed to a bearish outlook for natural rubber prices.

Weak Demand Weighs on Market Prices

The rubber market continues to experience downward price corrections as demand remains persistently weak. Market activities have been largely controlled, with buying primarily limited to regular customers. There were few trades for SIR 20 in the range of US$1605-US$1610/mt on FOB basis. However, the overall sentiment in the market is one of caution, influenced heavily by the uncertainties stemming from escalating tensions in the Middle East. Market sources indicate that the depressed buying levels can be traced back to the recent tariff announcements from the United States, which, coupled with ongoing global disruptions, further dampen sentiment.

Bearish Sentiment in the Chinese Market

In China, bearish sentiment has become increasingly evident. Helixtap's market sources report a relatively slow trading day characterized by minimal transactions for STR 20 mixtures, hovering around US$1670-US$1680/mt on a CIF basis. Furthermore, a trader noted a slight increase in rubber inventories, contributing to a more negative outlook for prices. Notably, the SHFE inventory level for TSR 20 (on warrant) saw a significant 71% rise from June 2 to June 20, underlining growing supply concerns.

Weak Demand from Major Tiremakers

Demand from major tire manufacturers, both globally and within China, continues to languish. This weak demand outlook has curtailed buyers' risk appetite, resulting in a cautious market approach. Although there have been minor fluctuations in tire production within China, these changes have not translated to a revival in demand, leading to further pressure on prices.

Supply Easing Amid Weather Disruptions

Despite some localized weather disruptions, supply conditions are easing, further contributing to price declines. Tapping activities have resumed in China's Yunnan production area, where operations had been temporarily affected. Although regions in Thailand and Hainan have seen increased rainfall, these disruptions are expected to be short-lived. 

However, some producers continued to offer at the higher level especially for Vietnam rubber in the range of US$1680-US$1690/mt on FOB basis with limited interest. A trade source noted that Vietnam offers are “too high” at the moment. 

The offers for African rubber however held largely stable around US$1580/mt on FOB basis during the day indicating at the producers attempt to cap any further correction in the prices. 

However, market expectations suggest a potential surge in global rubber supply in the near term which is likely to amplify bearish price pressures.

Price Forecast and Market Outlook

Given the combination of weak demand, increasing inventories, and easing supply, the price of natural rubber raw materials is anticipated to continue its downward trajectory in the coming weeks. Market participants are advised to remain vigilant as external geopolitical factors and domestic production fluctuations could further influence market dynamics and price levels.

Spot vs Futures Price Differentials

The recent 20-day analysis of spot rubber price differentials indicates fluctuating trends among STR20, SIR20, and AFR10 when compared to TSR20. The most recent prices show STR20 at 87, SIR20 at -3, and AFR10 at 2 as of June 20, 2025. STR20 experienced considerable volatility, peaking at 163 before declining sharply. SIR20 struggled with negative values, reflecting substantial downward pressure, while AFR10 exhibited some resilience, closing positively despite a recent slowdown. Overall, the mixed signals suggest a complex market environment for rubber prices.

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Weakness in Physical Market Continues Amidst Market Adjustments

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Market sentiment was "Slightly bearish" - Helixtap sentiment tracker

The rubber market faced a downturn during the Asian trade day, influenced by a lagging physical market, increasing supply, and overall economic uncertainty. The apprehension and the caution level continued to remain heightened while some producers were seen adjusting their prices downwards to match the buying expectations, weighing upon the margins especially for the Indonesian producers. 

Continued Weakness in the Physical Market

The rubber market exhibited persistent weakness during the Asian trade day, closing the week on a low note. Price trends followed the cues of the oil market, exhibiting a southbound movement, even amidst rising tensions in the Middle East. This week the prices initially largely mirrored the oil market movement post the Iran-Israel tension. However, lack of robust demand continued to hinder market recovery, resulting in correction in the prices in the second half of the week by around 2-3% compared to June 18 2025 levels.

Increased Offers Affecting Market Sentiment

In addition, market sentiment has been notably weighed down by increased offers. As anticipated, the introduction of African rubber offers has added supply pressure. Prices for SVR 10 rubber have been noted around US$1680-US$1690/mt on an FOB basis; however, traders believe that US$1650-US$1660/mt should be the effective trading level. African rubber remains the economical choice, with offers positioned at US$1570-US$1580/mt on an FOB basis, further impacting overall pricing structures.

Indonesian Shortages Meet Tepid Demand

Despite reports of shortages in Indonesia due to climatic factors, the market continues to exhibit a downward bias driven by tepid demand. Recent heavy rainfall in the North and early wintering effects in the South have been cited as contributors to supply shortage issues, leading to an uptick in raw material costs. Prices for Indonesian cup lump have ranged between IDR24,700-IDR24,800/kg ex-works. However, larger producers who can manage margin pressures are adopting a strategy of lowering offer levels, which further depresses pricing sentiment. SIR 20 trades were reported at around US$1610/mt on an FOB basis during the trading sessions.

Thai Price saw Downward Adjustments despite Bad Weather 

On the other hand, the Thai Meteorological Department has issued forecasts indicating increased rainfall across various rubber-producing regions, which is likely to impact tapping activities. Nevertheless, limited demand has kept market prices weak. Consequently, corrections in Thai cup lump prices have been observed this week, which now falls within the range of THB 46-THB 48/kg ex-works, reflecting an adjustment to market realities.

Economic Uncertainty Influencing Market Dynamics

The prevailing economic uncertainty also continues to exert pressure on buying sentiment. China's central bank has maintained its benchmark lending rates, while Japan's core inflation has reached a two-year high, putting pressure on the Bank of Japan to consider interest rate hikes. Additionally, escalating geopolitical tensions, particularly between Israel and Iran, are being closely monitored. A producer source remarked that amidst this complex backdrop, demand remains bearish in an oversupplied market, resulting in a downward bias.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of spot rubber prices STR20, SIR20, and AFR10 compared to TSR20 have exhibited notable fluctuations. As of June 19, 2025, STR20 has decreased significantly to a differential of 72, following a trend of lower prices in the latter part of the period. In contrast, SIR20 has shown volatility, reaching a low differential of -28, indicative of substantial market pressure. Conversely, AFR10 recently demonstrated resilience, with a current differential of -8, reflecting a recovery from previous declines. Overall, the market appears to be experiencing mixed signals.

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Physical Rubber Prices Decline Amid Bearish Demand

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Market sentiment was "Slightly bearish" - Helixtap sentiment tracker

Physical rubber prices experienced a notable decline during Asian trading day, influenced by bearish demand and reduced market activity. Buyers are increasingly turning to direct purchases from producers to mitigate costs and risks, contributing to a muted market atmosphere. Meanwhile, the enquiries for EUDR compliant is rubber gradually picking up indicating a shift in buyer’s focus. 

Steep Drop in Physical Prices

The physical rubber market saw a steep decline in prices during the Asian trading day, driven by bearish demand signals. Market sources reported that many regular buyers opted to stay out of the market, leading to a substantial reduction in overall trading activity. This withdrawal from the market has resulted in relatively muted physical market activities, creating a lack of momentum in price movements. Interestingly, some buyers have started to favor direct purchases from producers to limit additional costs and risks associated with trading intermediaries, highlighting a shift in buying strategies amidst current market conditions.

Ample Offers Resulting in Slight Glut

Market sentiment has further weakened due to an abundance of offers, leading to a slight glut in the rubber market. Offers for SIR 20 were noted in the range of US$1610-1620 per metric ton on a FOB basis, while lower offers for AFR 10 hovered around US$1580-US$1590/mt FOB, contributing to a negative pricing sentiment. Additionally, Thai producers have been seen adjusting their offers downward in an attempt to attract buyers, indicating pressure within the market to stimulate demand amidst oversupply concerns.

Gradual Recovery in EUDR Rubber Market

In contrast, activities in the EUDR rubber market have shown signs of gradual recovery, with regular inquiries beginning to resurface. A producer noted expectations that EUDR buying activities would resume, albeit later than initially anticipated. Currently, the premium for Thai EUDR compliant RSS3 is reported at approximately US$170-US$200/mt. However, premiums for TSR are perceived to be 'too low' by some sources, prompting concerns among producers about the sustainability of pricing levels. Helixtap market intelligence indicates a wide range of premiums in the market, leading to uncertainties for producers in their pricing strategies.

Impact of Fed Rates on Market Sentiment

The unchanged federal rates have also impacted buying sentiment negatively, despite this decision aligning with market expectations. The Federal Reserve maintains its key borrowing rate within a 4.25%-4.5% range, stable since December. With the central bank forecasting continued elevated inflation levels and anticipating lower economic growth, the prospect of two rate reductions later this year has yet to influence market behavior positively.

China's Economic Outlook and Its Repercussions

China is anticipated to keep its benchmark lending rates unchanged following recent sweeping monetary easing measures aimed at economic support. However, disappointing economic indicators, including sluggish credit growth and intensifying deflationary dynamics, underline the necessity for additional stimulus. Market participants believe that near-term economic stabilization will heavily depend on a forthcoming trade agreement with the U.S. This uncertainty surrounding China's economic policies adds an additional layer of complexity to the rubber market and its pricing dynamics.

Spot vs Futures Price Differentials

Over the past 20 days, the price differential data for spot rubber prices shows notable fluctuations. STR20 demonstrated a generally downward trend, recently concluding at 88, while SIR20 displayed a more volatile pattern, ending at -12. In contrast, AFR10 exhibited a strong upward trajectory, achieving a recent value of 8. The disparities in these price trends indicate varying market conditions affecting each rubber grade, with STR20 facing significant declines compared to TSR20, while AFR10 remains relatively robust despite earlier dips.

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Chinese Market Sentiment Boosts Rubber Prices Despite Tepid International Demand

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Rubber prices saw some support from slight revival in China's market sentiment as buying interest from tire makers increased. Despite international market sluggishness and supply easing, traders remained optimistic about potential price support from China.

Support from China's Financial Developments

Rubber prices found some support during the Asian trade day due to an uptick in market sentiment influenced by China's strategic moves to develop its financial systems. The head of China's central bank emphasized the intention to expand the international use of the digital yuan, which has encouraged more activities in the Chinese market during Asian trading hours. As a result, a resurgence in buying interest from Chinese tire manufacturers was paired with arbitrage trading, boosting market dynamics, as per Helixtap market intelligence. 

Trades for STR 20 mixtures were noted in the range of US$1710-US$1715/mt on a CIF basis. Market stakeholders are hopeful that if this momentum continues, it could provide essential support for rubber prices going forward.

International Market Remains Stagnant

Contrarily, the international rubber market continued to exhibit sluggish behavior, hindered by rising prices and limited trading activities. The volume of trades was minimal, with some transactions reported for SIR 20 in the range of US$1640-US$1645/mt on an FOB basis. Buyers expressed apprehension due to a weak US market and the pending Federal Reserve's monetary decision, contributing to the slow pace of the market. Furthermore, oil prices dipped slightly despite rising geopolitical tensions in the Middle East, adding to the cautious sentiment in the global rubber market.

Easing Supply Weighs on Thai Rubber Prices

A significant factor limiting any substantial increase in rubber prices is the improved supply situation, particularly influencing Thai rubber prices. Sources from Thailand reported that although the heavy rains affected tapping operations to some degree, it is primarily the lack of demand that is pressuring prices downward. The increased supply from Thailand has left producers with limited ability to elevate prices. This situation is expected to keep rubber prices under pressure, complicating the outlook for future price movements.

African Offers Add to Market Pressure

Additionally, an increase in offers for African rubber has emerged, further weighing on trader sentiment. Traders believe that this influx of African cargoes could exert downward pressure on prices. Offers for AFR 10 to China were noted in the range of US$1630-US$1640/mt on a CIF basis. African rubber remains the most economical option in the marketplace, creating a significant price differential with STR and SIR rubber. The spread between STR and AFR is approximately US$100/mt on an FOB basis and around US$30/mt when compared to SIR, emphasizing the competitive position of African rubber in the global trading environment.

Spot vs Futures Price Differentials

Over the past 20 days, the price trends of spot rubber grades STR20, SIR20, and AFR10 compared to TSR20 exhibit notable fluctuations. STR20 has generally maintained a stable range, peaking at 163 before settling at 130 on the latest date. Conversely, SIR20 has shown considerable volatility, moving from a negative differential to a recent position of -10. AFR10 has demonstrated a strong upward trajectory, reaching a high of 55 but closing at 30, reflecting a recent softening. Overall, each grade has exhibited distinct trends, with STR20 and SIR20 showing resistance to drastic changes in the most recent period.

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Physical rubber prices exhibit downward bias amid muted demand

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Market sentiment was "Slightly bearish " - Helixtap sentiment tracker

Rubber prices experienced a slight decline, diverging from futures markets due to weak demand, particularly from China. Limited trading activities and geopolitical concerns also contributed to the bearish sentiment in the market.

Physical rubber prices retreat amid low trading volumes

During the trading day, physical rubber prices displayed a slight downward bias, diverging from the trends observed in the futures market. The primary reason for this decline was the muted demand in the market, which has significantly limited trading activities. Price assessments reflect the ongoing weakness in buyer interest, leading to a cautious trading environment.

Persistent weakness in China's demand

Weakness in China was particularly evident during the Asian trading session, further weighing on market sentiment. Market sources indicated a stark lack of interest in international trades, with very limited transactions reported, primarily involving warehouse cargoes. "The overall Chinese buying is slow. We haven't seen any USD trades during the day," remarked a trader, encapsulating the prevailing market atmosphere.

Interest shifting towards EUDR cargoes

Traders have noted that buyers are showing more interest in European Union Due Diligence Regulation (EUDR) cargoes, although trade activity in this area remains constrained. While discussions between buyers and sellers regarding EUDR cargoes have commenced, the overall demand has yet to materialize. A producer source mentioned that market participants are awaiting further clarity on tariffs and the implications of rising geopolitical tensions in the Middle East, which are keeping the demand under wraps.

Production challenges in Indonesia squeeze margins

Meanwhile, in Indonesia, raw material shortages are becoming an issue for producers, as heavy rains have negatively impacted production levels. This weather-related disruption has placed additional pressure on profit margins, leading to a bearish trend in TSR prices. As reported by Helixtap sources, trades for SIR 20 were noted around US$1620/mt on an FOB basis, reflecting the challenging conditions producers are facing.

Market sentiment influenced by Fed and BOJ decisions

The market is closely monitoring the upcoming decision by the Federal Reserve, with market participants largely expecting the central bank to maintain current interest rates. Any signals regarding the future path of U.S. monetary policy will be closely watched. Meanwhile, the Bank of Japan’s recent decision to keep interest rates steady indicates a cautious approach as it attempts to navigate the complex economic landscape shaped by a decade of stimulus efforts.

Spot vs Futures Price Differentials

Over the past 20 days, spot rubber prices exhibit a generally positive trend, particularly for STR20, which has shown a consistent increase, culminating in a recent price differential of 141 compared to TSR20. SIR20 demonstrated volatility, oscillating around zero but recently stabilizing at 1. Conversely, AFR10 has experienced a substantial upward trajectory, achieving a differential of 46, indicative of strong market performance. Collectively, these trends suggest an improving market sentiment for rubber prices, especially with STR20 and AFR10 achieving their highest differentials in the observed period.

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Rubber market uptrend amid geopolitical tensions; demand-suply dynamics unchanged 

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

The physical rubber market shows an uptrend following oil prices, tempered by geopolitical tensions and mixed macroeconomic data from China. Despite some price increases, buyer interest remains muted, reflecting a cautious market sentiment. In addition, anticipation of improved supply in coming months, capped any strong recovery. 

Market Trend Driven by Oil Prices and Geopolitical Tensions

The rubber market continues to follow an upward trend, largely influenced by rising oil prices amid increasing tensions in the Middle East. Market sources have noted, however, that the overall response from market participants has been muted. The key reason being that the market fundamentals are still weak which does not support any mid-long term recovery. In addition, ongoing conflict is anticipated to dampen global economic growth, as it can disrupt crucial shipping routes which has heightened the caution and put a cap on potential price rises in the rubber market.

Mixed Economic Data from China

Further some positive signs from China's retail sales provided some support to overall market sentiment. Although industrial output saw a year-on-year increase in May, it has slowed compared to the previous month. Conversely, retail sales growth came in unexpectedly strong, improving market outlook. Nevertheless, diverse economic data kept Chinese rubber imports limited, with buyers adopting a 'wait and watch' stance in alignment with international market dynamics.There were some trades for STR mixture in the range of US41690-US41695/mt on CIF basis, but the caution amid the buyers was predominant. 

Limited International Buying Activity

International buying also remained lackluster, with buyers hesitant to make commitments. Producer sources report very little buying interest during Asian trading hours. Although there were higher offers for SIR 20 around US$1680-US$1690/mt on an FOB basis, actual trading occurred at levels between US$1620-US$1625/mt. This indicates the bearishness amid the buyers and unwilling to accept the higher prices. Furthermore, the suppliers were seen adjusting to the buyer’s expectation despite margin pressure given the bearish demand outlook.  

A broad caution is expected to persist unless clarity emerges regarding U.S. tariffs and ongoing geopolitical issues, with many buyers expecting further price corrections due to potential supply increases.

Expected Increase in African Supplies

Expectations for an influx of African rubber supplies next month are growing. While market participants noted offers for AFR 10 around US$1690-US$1700/mt on a CIF basis to Europe, these were regarded as too high. Concurrently, supplies from Thailand are also increasing, with tapping activities projected to fully resume by the end of June. This anticipated recovery might lead to excess supply in the market, particularly as demand remains subdued.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials among spot rubber prices—STR20, SIR20, and AFR10—compared to TSR20 reveal notable trends. STR20 demonstrated increasing values, peaking at 163, suggesting robust market performance. In contrast, SIR20 exhibited volatility, with a recent range from -20 to 35, concluding at -2, indicating a struggle relative to TSR20. Conversely, AFR10 displayed a positive trajectory, reaching a peak differential of 55, highlighting strong demand or price resilience. The most recent price differentials were 138 for STR20, -2 for SIR20, and 53 for AFR10, reflecting varied market dynamics.

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Rubber Prices Surge Amid Geopolitical Tensions in the Middle East

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Recent surge in the geo-political tensions in the Middle East prompted a northbound movement in rubber prices, despite ongoing market weaknesses. Concerns about demand persist, while supply dynamics vary by region.

Geopolitical Tensions Prompt Price Movement

The recent military strike launched by Israel against Iran has triggered a notable upward movement in rubber prices. This escalation in the Middle East has introduced significant uncertainty within the markets, coinciding with existing pressures on the global economy due to aggressive trade policies, particularly from the US. The geopolitical climate often supports rubber prices, and this surge is reflective of that trend. However, market participants remain cautious, anticipating that this uptick in prices is likely to be temporary given the underlying weakness in market fundamentals.

Historical Price Trends During Conflict

In the previous rounds of conflict in 2024, particularly during Iran's initial attacks, the market witnessed an intraday spike of 1% in prices in early April. During the similar escalation in October despite the announcement regarding the delay in the European Union Deforestation Regulation (EUDR) implementation, led to a cap on price fluctuations later in October. This historical context highlights the market's sensitivity to geopolitical events while also emphasizing the transient nature of such price rallies. However, in both the instances the rally was short-lived which aligns with the current market expectations.

Market Participants Adjusting Strategies

The current market condition perplexed the sellers regarding price adjustments amidst limited demand paired with ample supply. A trader noted that crude oil prices have risen by approximately 11%, which has similarly propelled rubber prices upwards. However, transaction reports indicate only modest increases compared to previous trading days. Specifically, trades for SIR 20 were recorded within the range of US$1610 to US$1615 per metric ton on an FOB basis, with limited interest for higher offers of SVR 10, sitting between US$1700 and US$1710 per metric ton.

Producers Facing Margin Pressures

Despite the slight surge in rubber prices, producers remain frustrated as high raw material costs continue to negatively impact their profit margins. One producer source relayed that the effect of the current price increments is minimal since fundamental costs remain elevated. According to Helixtap market intelligence, the prices for Indonesian cup lump have been reported between IDR 24,000 to IDR 24,500 per kilogram on an ex-works basis, reflecting continued cost pressures throughout the supply chain.

Thailand's Supply Conditions Shifting

Meanwhile, in Thailand, the supply conditions showed signs of improvement; however, prices for field latex have also surged from THB 52.5 per kg last week to THB 55.5 per kg during the Asian trade day. This increase is attributed to the producer’s anticipation that the recent favorable weather conditions may be short-lived. Despite the uptick in supply, demand remains slow, contributing to an overall market slump. Meanwhile, trading activity for EUDR compliant rubber is beginning to gather ground, although transaction volumes remain unremarkably low, reflecting the cautious state of the market.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of spot rubber prices indicate a fluctuating but generally upward trend for STR20 and AFR10, while SIR20 displayed more volatility. The most recent price for STR20 is 140, reflecting resilience despite periodic drops. SIR20's latest differential stands at 0, indicating stabilization after a series of gains and losses. Notably, AFR10 has shown remarkable strength, achieving a differential of 55, suggesting a significant rise in its value relative to TSR20. This trend highlights the dynamic nature of the rubber market during this period.

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Market Sentiment Dampened by Trade Uncertainty; Prices Decline

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Market sentiment was "Slightly bearish" - Helixtap sentiment tracker

Physical market sentiment has turned negative amid rising trade concerns and waning optimism around US-China trade talk, impacting prices significantly. Meanwhile, amid declining prices producers face challenges amidst high raw material costs. With limited buying interest primarily from the Japanese buyers and weak demand from China H2 outlook remains bearish.

Trade Uncertainty Weighs on Market Sentiment

The market during the day was seen under pressure with diminishing optimism surrounding US-China trade talks. Adding to uncertainty, Trump’s announcement for his plans to send letters to U.S. trading partners detailing new tariff rates in the upcoming weeks, raised concerns over potential escalations in trade tensions. This uncertainty has created a strong downward pressure on prices, exacerbating worries among producers and market participants. A trader source noted that there is hardly any support from the sentiments lately that is weighing on market fundamentals as well.

Producers in Distress Amid Price Drop

The decline in rubber prices has raised alarms among producers, particularly in Indonesia, who are grappling with elevated raw material costs. A source from the region indicated that the traded levels are significantly below production costs, which is manageable for larger producers but poses severe challenges for small and mid-sized ones. Traded level for SIR 20 were observed around US$1600/mt, approximately US$80-90/mt below production costs, highlighting the strain that producers are facing in this volatile market environment.

Demand Challenges impacting Buyer Sentiment

Meanwhile, the Asian trading day saw limited activity from buyers, barring some interest from the Japanese buyers while others remained on the sidelines attempting to gauge pricing levels for the second half of the year. The market is experiencing dwindling confidence due to slower automotive sales and shutdowns announced by certain tire manufacturers. According to Helixtap market intelligence some negotiations related to the EUDR have commenced; however, the prevailing uncertainty around tariffs remains a significant deterrent for buyers in making purchases.

Weakness in Chinese Market

The Chinese market continued to display ongoing weakness, characterized by limited buying interest and a slowdown in downstream tire production. Sources in the market reported that tire makers currently hold inventory levels exceeding 40 days, suggesting a lack of urgency to replenish stocks amid sluggish demand conditions. The recent price cuts announced by some Chinese auto majors explains the limited interest from the tire makers as they lack confidence around the outlook. There were a few trades for the STR 20 mixture reported at around US$1665-US$1670/mt on a CIF basis, painting a picture of a market struggling to revitalize demand.

Increased Supply from Africa Contributes to Price Pressure

Moreover, increased offers from African producers have contributed to a glut in the market given the tepid demand. Offers for AFR 10 were noted in the range of US$1590-US$1600/mt on a FOB basis. The influx of these offers is exerting further downward pressure on pricing sentiment, with many market observers anticipating that this could prolong the existing bearish trend in rubber prices.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials among spot rubber prices—STR20, SIR20, and AFR10—compared to TSR20 have exhibited notable fluctuations. STR20 has shown a strengthening trend, reaching a recent peak differential of 163 on May 29, while its latest value stood at 130. Conversely, SIR20 experienced a decline, with its last differential dropping to -5, following a significant decrease earlier in the period. In contrast, AFR10 demonstrated the most robust performance, culminating in an impressive differential of 50 on June 11, reflecting a consistent upward trajectory.

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Northbound Market Movement Amid US-China Trade Optimism

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Market sentiment was "Slightly bullish " - Helixtap sentiment tracker

The rubber market showed a positive trajectory, driven by expectations of fruitful US-China trade discussions. However, widening bid-offer gaps limited trade volumes despite some market inquiries.

Market Optimism Surrounding US-China Trade Talks

The recent northbound momentum in the rubber market is largely attributed to heightened optimism surrounding US-China trade negotiations. Market participants are increasingly hopeful for a constructive dialogue that could alleviate ongoing trade tensions between the two largest economies. Such expectations have provided a backdrop for market activity, fostering an environment conducive to price stability and potential upward movements.

Progress on Trade Truce Framework

Officials from the U.S. and China recently indicated that they have agreed on a framework to restore the trade truce, which includes commitments from China to remove export restrictions on rare earth materials. Nonetheless, a durable resolution to the underlying trade differences remains elusive, leaving market participants vigilant and seeking clarity. The continued discussion of trade-related policies is likely to influence market dynamics moving forward.

Limited Trade Activity Amid Bid-Offer Gaps

Despite the optimism and some inquiries in the market, the widening bid and offer gaps have constrained the volume of trades conducted. Buyers and sellers appear to be at a stalemate, with notable discrepancies between bidding prices and offers for rubber products. This situation has resulted in a cautious trading atmosphere, making it challenging for transactions to occur at mutually agreeable terms.

Muted Chinese Buying Activity

Meanwhile, Chinese buying activity remained subdued, characterized by an abundance of offers that have not been met with significant demand. Reports indicate that offers for AFR 10 cargoes are ranging between US$1610 -US$1620/mt on a CIF basis, with warehouse cargoes prices lower at US$1580-US$1590/mt. Buyers have largely held their bids steady, exhibiting a reluctance to increase offers amid a lack of aggressive purchasing actions.

Impact of tariff on tire majors 

In a significant development a major tire manufacturer announced the impending closure of its plant in central Mexico by the end of the year. This decision was due to shifts in the passenger car and light truck tire market. As per the industry reports the facility became outdated while market demand has transitioned. This indicates that the tire makers are struggling to deal with the after effect of the US tariffs on auto parts, the repercussions would trickle into the rubber demand as well. 

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials among STR20, SIR20, and AFR10 compared to TSR20 reflect notable fluctuations. STR20 exhibited a generally upward trend, peaking at 163 before settling at 125 most recently. SIR20 showed significant volatility, ranging from a low of -20 to a high of 35, concluding on a neutral note at 0. AFR10 displayed a more stable trajectory, starting at 0 and rising sharply to 35 recently. This indicates a recovering trend in rubber prices, particularly for AFR10, amidst the observed market volatility.

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Rubber Prices Stabilize Amid Divided Market Sentiments

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Physical rubber prices gained slight support during the Asian trading day, albeit amidst a divided outlook. While some attributed the uplift to technical support for the prices, others cited optimism from US-China trade negotiations. Meanwhile, weakness in Chinese macroeconomic indicators weighed on Chinese market sentiment amidst widened bid-offer gaps.

Physical Prices Show Support in Asian Trade

The Asian trading day witnessed a modest support for physical rubber prices, along with some uptick in the market activity. However, the rationale behind this recovery remains a topic of debate among participants. The price movement was a result of some resistance from producers as these levels would be negative margin territory. The renewed optimism surrounding US-China trade talks also kept the sentiment buoyant. Despite this support, market fundamentals generally remain unchanged, underscoring an underlying ambiguity in demand-supply dynamics.

Awaiting US-China Trade Talks Outcome

Meanwhile, the market participants find themselves in a state of anticipation regarding the outcome of the ongoing US-China trade talks, hoping for positive results that could bolster market confidence. Although this sentiment has provided some support within trading activities, certain observers express caution. A trader noted a prevailing bearish sentiment within the Chinese market, with many not expecting favorable outcomes from the negotiations. 

Chinese Market Activity Slows Amid Price Surge

The Chinese trading activities displayed signs of slowing down during the day in light of escalating prices. Market sources indicated that the widening bid-offer gap exerted pressure on trading volumes, resulting in limited engagement. There was, however, some buying interest noted for STR 20 mixtures, with offers ranging between US$1690 and US$1695 per metric ton on a Cost, Insurance, and Freight (CIF) basis. Furthermore, macroeconomic indicators have begun affecting sentiment negatively, as China's producer deflation deepened, reflecting significant economic challenges that continue to hinder robust market participation.

International Market Sees Narrowing Price Volatility

Slightly in contrast, the international rubber market exhibited improved activity, characterized by a narrowing daily price volatility, suggesting that the market is consolidating at lower levels. Trades for SIR 20 were reported throughout the day, with transactions noted around US$1620 per metric ton on a Free on Board (FOB) basis. This stability in trading is indicative of market participants adjusting to the prevailing price sentiment, with many bracing for potential future price movements amidst ongoing geopolitical tensions.

Impact of US Tariffs on Motor Imports

On the other hand, the ramifications of US tariffs have become more pronounced, particularly evident in the automotive sector where US motor imports registered a steep year-on-year decline of approximately 38% in May (in number of shipments), coupled with a staggering month-on-month drop ((in number of shipments) of about 43%, as per US customs data. These developments underscore the trade war's disruptive effects on imports of automobiles and parts, which are likely to escalate domestic production costs for consumers. The rush to purchase prior to tariff implementation has subsided, leading to reduced acquisition activities as the market adjusts to the new tariff landscape.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of rubber varieties show distinctive trends. STR20 has generally increased, peaking at 163, reflecting consistent demand relative to TSR20. Conversely, SIR20 exhibited considerable volatility, with its most recent price stabilizing at 0, indicating a return to parity with TSR20. Meanwhile, AFR10 has shown a robust upward trend, recently reaching 35, highlighting its strengthening position in the market. Overall, these price movements suggest varying market dynamics influencing each rubber type relative to TSR20.

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Physical Rubber Prices Remain Stagnant Amid Market Uncertainties

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Market sentiment was "Neutral" - Helixtap sentiment tracker

The rubber market showed limited activity due to holidays in parts of Asia and bearish sentiment, while price stability prompted cautious enquiries for EUDR cargoes. Divided market opinions reflect uncertainty over tariff impacts and macroeconomic indicators from China, further influencing demand.

Market Stagnation Amid Holidays in Asia

The physical rubber market displayed sideways movement recently, primarily influenced by holiday celebrations in various parts of Asia. Despite the trading lull, the overall sentiment remained bearish, which has kept many buyers hesitant. This caution in the market has resulted in limited transactions, reflecting broader concerns about future pricing and demand stability.

Cautious Interest in EUDR Cargoes

While prices have largely stabilized, there has been a slight uptick in enquiries for EUDR compliant cargoes. However, tire manufacturers are exercising extreme caution in booking larger volumes due to prevailing uncertainties regarding tariffs. This cautious approach is evident as stakeholders analyze potential risks associated with changing regulations and market dynamics.

Divided Opinions Among Market Participants

Market participants have expressed varying opinions regarding the future trajectory of rubber prices. Some are optimistic that ongoing discussions between the U.S. and China may offer sentimental support to the market, while others remain skeptical. There are concerns that weakness in Chinese economic indicators might prompt stimulus measures from the government; however, without factoring in the impacts of tariffs, many believe that these measures will have limited effectiveness in bolstering demand.

China's Deepening Producer Deflation

China's economic landscape has been challenged recently, with producer deflation deepening to its lowest point in nearly two years as of May. Concurrently, consumer prices have continued their decline, highlighting the economic struggles exacerbated by trade tensions and a prolonged downturn in the housing sector. The ongoing difficulties have broader implications for commodity imports, including rubber, as concerns about growth further dampen demand prospects across the sector.

Declining Commodity Imports and Broader Implications

In May, China recorded a decline in imports of major commodities, raising alarms about potential declines in rubber demand as the country grapples with slow economic growth. This situation underscores heightened anxiety among market participants regarding future consumption patterns and overall demand for rubber, further contributing to the bearish sentiment prevailing in the rubber market.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials for STR20, SIR20, and AFR10 in comparison to TSR20 have displayed varying trends. STR20 has generally experienced upward momentum, reaching a peak differential of 163, while the most recent price stands at 125. Conversely, SIR20 has shown considerable fluctuations, with its most recent differential at 20, after previously reaching a low of -20. AFR10's differential has also been volatile, closing at 5, following a recent high of 25. Overall, the data indicates a mixed performance among the different rubber grades against TSR20.

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Rubber Prices Find Support Amid Trade Optimism but Demand Remains Weak

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Physical rubber prices have shown some resilience following renewed US-China trade talks, although demand appears weak. Buying activity has slowed, particularly from Chinese buyers. Market participants seek stability amidst uncertainty, with mixed sentiments regarding African offers and the ECB's interest rate decision.

Renewed Trade Talks Boost Sentiment

The recent resumption of trade talks between the US and China has provided some support for rubber commodity prices, raising optimism about economic growth and potential increases in demand. This optimism has been further supported by a positive outlook in the oil market. However, it is important to note that this support remains largely sentimental, as actual demand for rubber continues to exhibit weakness. The expectation of improved economic relations has not yet translated into substantial increases in consumption, leaving market participants cautious.

Buying Activity Slows Amid Price Increases

As prices have edged upward, buying activities in the rubber market have noticeably slowed down. Chinese buyers, who had been quite active over the previous days, are displaying a more cautious approach. According to sources, while the buying has largely been characterized by arbitrage opportunities, the pace has decelerated compared to earlier in the week. A few trades for STR 20 mixture were reported in the range of US$1670-US$1675/mt on CIF basis.

Additionally, the public holiday in Indonesia has affected trading activities, contributing to a general sense of inactivity in the market.

Market Participants Seek Stability

Despite the prevailing uncertainties regarding the demand outlook, market participants are expressing hopes for some stability in the rubber market. The fluctuating dynamics driven by geopolitical tensions and varying economic indicators present challenges, yet there remains a collective desire for predictable trading conditions. Operators are keenly watching for signals that can indicate a more stable demand environment, which is crucial for guiding future buying and selling decisions.

African Offers and Optimism

There have been some offers from African suppliers in the rubber market, which, according to various market sources, are perceived to be relatively high. Some traders speculate that the current optimism in prices could be attributed, at least in part, to anticipated buying from the EU for EUDR rubber. The varying levels of offer prices reflect the complexities of the market supply dynamics and the expectations surrounding future buying patterns, particularly in relation to regulatory changes under the EUDR.

Impact of the European Central Bank's Decision

The European Central Bank's decision to cut interest rates, as was widely anticipated, has added another layer of complexity to the rubber market. With inflation finally returning to the ECB's 2% target after a prolonged period of easing, the institution has indicated a potential pause in its monetary easing cycle. This development is aimed at supporting the eurozone economy, which has faced significant pressures from erratic US economic policies. The influence of soft economic readings from the US has uplifted expectations of potential easing by the Federal Reserve, further intertwining the global economic landscape with the future trajectory of rubber prices.

Spot vs Futures Price Differentials

Over the past 20 days, the price trends of spot rubber prices indicate notable fluctuations compared to TSR20. STR20 maintained a relatively high differential, peaking at 163 on May 29 before settling at 125 on June 5. In contrast, SIR20 experienced significant volatility, with a low differential of -20 on May 30 and rebounding to 20 on June 5. AFR10 also displayed erratic behavior, reaching a low of -25 on May 30 and stabilizing at 5 on the most recent date. Overall, while STR20 demonstrated resilience, SIR20 and AFR10 displayed greater sensitivity to market conditions.

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Rubber Prices Correct Amid Supply Concerns and Auto Sector Pressures

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Market sentiment was "Slightly bearish" - Helixtap sentiment tracker

Physical rubber prices saw a downward correction during Asian trading as resistance emerged at the US$1600/mt mark, impacting market sentiment. Concerns around margins and pressures from the auto sector are contributing to a bearish outlook.

Market Correction as Prices Hit Resistance

During the recent Asian trading session, physical rubber prices corrected notably as the market faced resistance at the US$1600/mt level. This movement took several market participants by surprise, as many had anticipated stronger support amidst ongoing supply challenges for raw materials. 

The expectation of a stable or potentially rising price trajectory was not met, indicating a disconnect between market expectation and price action.A producer source noted that the US$1600/mt would be a support level but the market took a reverse direction.

Producers Concerned Over Margins

Meanwhile, rising concerns regarding profit margins have been persistent among producers in the rubber sector. Observations have been made that the unexpected drop in rubber prices over two consecutive months is particularly challenging for producers, as raw material prices have not followed a similar correction trajectory. 

Notably, sources from Indonesia reported that raw material prices remained stable, with bids failing to meet the prevailing market level of approximately IDR 25,000/kg, there were no offers.A trader source believed the prices would see more downward pressure and the raw material prices would follow eventually.

Buying Sentiment Remains Weak

The buying sentiment across the rubber market has yet to recover, thereby continuing to exert downward pressure on market activities. Reports indicate that several regular buyers have chosen to refrain from market participation, likely due to uncertainty surrounding future price movements. This hesitance among buyers has led to diminished trading volumes, further reflecting the cautious sentiment prevailing in the market.

Auto Sector Facing Increased Pressures

Compounding the challenges faced by the rubber sector, the automotive market is experiencing heightened pressures, particularly due to recent export restrictions on rare earth materials from China. Automakers in both the US and Europe have expressed strong concerns regarding these limitations, indicating potential disruptions in global production operations. Notably, firms are already strategizing with suppliers on measures to safeguard against shortages, including stockpiling essential components. This situation has led to extended delays in shipping and procurement processes, further straining already stressed supply chains.

China's Export Controls and Impact on Automakers

The implementation of stringent controls by China on a wide array of rare earths and related magnets has significantly impacted automakers' supply chains. With critical components now in jeopardy due to these regulations, manufacturers find themselves in a position where they need to devise alternative sourcing strategies. Reports indicate that several companies, including Ford, have faced immediate production shutdowns—such as one factory idling for a week—due to a shortage of essential rare earth materials needed for vehicle production.

Conclusion on Market Dynamics

The current landscape for rubber prices is highly influenced by a confluence of supply concerns, weak buying activity, and significant pressures from the automotive sector fueled by external geopolitical factors. As the market continues to navigate these complexities, participants are left with abiding uncertainties regarding both pricing stability and the broader implications on the industrial landscape.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of spot rubber grades STR20, SIR20, and AFR10 in comparison to TSR20 have exhibited notable fluctuations. STR20 has shown a strong upward trend, peaking at a differential of 163, while the most recent price remains elevated at 125. SIR20 initially fluctuated modestly but has transitioned to a more positive stance, finishing at 25. Conversely, AFR10 has experienced volatility, closing at 10, indicating significant variability in its competitiveness relative to TSR20. Overall, these trends suggest a dynamic market landscape for rubber prices.

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Rubber prices rise as buying activity increases, but optimism faces headwinds

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Rubber prices saw a continued  positive shift during the Asian trade day due to increased buying activity, particularly in China and supply challenges from Thailand. However, market sentiment is tempered by factors like EV price wars, trade tariffs.

Chinese market shows improvement in buying activity

During the Asian trading hours, trading activity in the Chinese market exhibited improvement. Buyers appear to be predominantly engaged in arbitrage buying, yet the overall sentiment has brightened due to the uptick in trading volumes. A trader source noted that buyers are adjusting their positions to capitalize on potential profit-taking opportunities. Despite this, the tire manufacturers' demand remains subdued, reflecting a generally bearish outlook.

Physical prices gain traction with increased buying

The rubber market as a result experienced an increase in physical prices, driven by this resurgence in buying activity. Market sources indicate that prices are appealing to buyers, which has restored some confidence in the market. This uptick in buying has prompted a shift, with traders expressing a more optimistic outlook.

Raw material shortages contribute to market optimism

Meanwhile, several market participants have attributed the prevailing optimism to a shortage of raw materials, particularly in Thailand. Continuous heavy rains have led the Thai Meteorological Department (TMD) to issue alerts for further rainfall impacting 37 provinces due to a moderate southwest monsoon. Although there has been some correction in Thai raw material prices amid weak demand, supply remains erratic, which keeps the markets on edge.

Potential setbacks from rising EV price wars in China

Despite the existing optimism, there are concerns regarding the ongoing price wars in the electric vehicle (EV) sector in China, which may dampen market sentiment. Tesla has reported a significant decline of 15% in EV sales in May compared to the previous year, and this trend appears to be mirrored across much of Europe as well, raising concerns about future demand for rubber and tire products.

Tariff pressures and economic signaling impacting the market

The commodities market is under pressure from heightened tariffs, particularly following the doubling of tariffs on steel and aluminum to 50%. Such tariffs are likely to have broader implications for the commodities market as costs rise. Additionally, the recent slump in US factory orders, exemplified by a 17.1% decline in the transportation sector—most notably a staggering 51.5% drop in commercial aircraft orders—signals that economic activity may be slowing, further adding to market uncertainty. Orders for motor vehicles, parts, and trailers also dipped by 0.7%, indicating a cautious outlook going forward.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of spot rubber prices concerning TSR20 demonstrate notable fluctuations across the various grades. Specifically, STR20 has shown a strong upward trend, peaking at 163 before settling at 133 on June 3, 2025. Conversely, SIR20 exhibited significant volatility, with its most recent differential at 33, reflecting recent improvements after a dip. AFR10 also experienced highs and lows, concluding at 18, indicating recovery after a recent downturn. Overall, the most recent prices indicate a mixed but cautiously optimistic trend among the different grades of rubber.

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Technical Support Aids Physical Rubber Prices Amid Market Mutedness

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Market sentiment was "Slightly bullish" - Helixtap sentiment tracker

Slight upticks in physical rubber prices during the Asian trade day were due to technical support and renewed buying interest from Japanese and Korean buyers. Market activities remained muted amid holidays, while the impact of U.S. tariffs and ECB rate decisions looms large over the sector. Meanwhile, the producers continued to struggle with negative margins as downward bias on the prices continued. .

Technical Support and Producer Margins

Some technical support for futures provided a semblance of stability to physical rubber prices, even as market fundamentals largely stayed constant. Key market participants reported that many producers are operating at negative margins, prompting them to withhold their offers for as long as possible. This strategic delay illustrates their cautious approach in an increasingly challenging market environment.

Uptick in Buying Interest from Japan and Korea

Despite challenging conditions, there was a notable increase in buying interest from Japanese and Korean buyers this week. This renewed demand has temporarily capped any potential price corrections in the market. Market sources indicated that trades for SIR 20 were conducted in the price range of US$1615 to US$1620/mt on an FOB basis. In particular, a trader source highlighted that some Japanese buying interest emerged on a day when Korean markets were on holiday, suggesting a strategic focus on securing rubber at these levels.

Market Activities Muted Amid Thai Holidays

Market activities were generally muted this week, primarily due to holidays in Thailand, which is a significant rubber producer. Additionally, anticipated offers from African producers (AFR) were still absent from the market, adding to the lack of trading momentum. APROMAC prices recorded a slight decline compared to May, raising questions about how much African producers might be willing to lower their prices as the global demand and prices remain bearish.

Impact of U.S. Tariffs on China's Manufacturing Sector

There was limited support from Chinese macro economic data as well. In May, China’s factory activity saw its first contraction in eight months, indicating a direct negative impact from U.S. tariffs on this critical manufacturing hub. The decline in new export orders has raised concerns amid the market participants. Producers cited the U.S. tariffs as a limiting factor for global demand, further complicating market dynamics. Manufacturing output also experienced a contraction for the first time since October 2023. These trends indicate a broader slowdown, particularly as output prices have faced continuous declines over the last six months, driven by intensified market competition which has especially heightened in the auto sector. Market sources noted that there is limited interest from China amid the concerns about the demand outlook. 

Monetary Policy and Global Economic Uncertainty

Meanwhile, the European Central Bank (ECB) is anticipated to reduce its interest rates by a quarter point. However, traders are bracing for a potential pause in future rate changes due to improving economic indicators and resurfacing concerns regarding long-term inflation. Furthermore, the ongoing uncertainties surrounding U.S. tariffs create a complex environment for the ECB as it deliberates on the implications for business activity and pricing strategies moving forward. This might impact the buying interest for EUDR rubber which the market participants were expecting to pick up in the second half of the year.

Spot vs Futures Price Differentials

Over the past 20 days, the price differentials of spot rubber prices—STR20, SIR20, and AFR10 compared to TSR20—exhibited notable fluctuations. STR20 has shown a consistent upward trend, peaking at 163 on May 30, while SIR20 displayed volatility, with a notable recent rise to 35. Conversely, AFR10 demonstrated a mixed trend, with its most recent price standing at 25. This suggests that, despite varying levels of volatility among the different grades, STR20 remains the most robust, indicating strong market support, while SIR20 and AFR10 are experiencing transitions in their market positioning.

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Weak Sentiment in Asian Rubber Markets Amidst Trade Tensions

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Market sentiment was "Bearish" - Helixtap sentiment tracker

Asian spot markets witnessed weak sentiment and limited trading activity, driven by concerns over weak demand amid ongoing trade disputes. Thai producers adjusted prices due to market dynamics including SICOM correction, while adverse weather conditions cast shadow over production levels.

Weak Sentiment in Asian Spot Markets

The Asian rubber spot market experienced a subdued sentiment, characterized by limited trading activity. This reflects a larger trend as the Singapore Commodity Exchange (SICOM) experienced a sharp price correction. Analysts have expressed a pessimistic outlook owing to weak demand and the ongoing tariff tussle. The conflicting signals emerging from the U.S. on tariffs deepen market uncertainty, amid signals of discussions between President Trump and President Xi Jinping aimed at resolving trade issues, particularly concerning critical minerals. The 50% tariff on steel imposed by Trump and the legal knot in US over tariff, still to be fully untied, make things hazy.

Thai Producers Respond to Market Pressures

Thai rubber producers, after a month of holding back their offers at higher price levels, appear to be re-entering the market aggressively. A promised floor price from the Thai government seems to have not materialised which, in turn, has compelled producers to lower their prices. Current raw material prices are around FL-54.50/55 THB/Kg and CL- 45THB/Kg.This downward adjustments from Thailand aligned with the significant corrections observed in SICOM prices on Monday, especially when major markets in Asia, including China and Bangkok, were closed. However, some producers remain hesitant to offer at these lower levels, citing them as unrealistic, amidst signals of insufficient supply normalization for the new season.

Impending Auto Sector Crisis

The Chinese government's announcement of a policy to ban the sale of homes before completion marks a significant shift that may exacerbate financial troubles and will have a cascading effect across the economy, potentially dampening consumption levels. Additionally, global auto manufacturers are alerting stakeholders about an imminent shortage of rare-earth magnets from China, which could lead to temporary shutdowns of car factories, thereby affecting rubber demand from the tire sector.

Production Challenges Amid Seasonal Changes

In China’s Yunnan province, rubber production has temporarily declined due to adverse weather conditions, specifically heavy rainfall, although a return to normal production levels is expected soon this month. Meanwhile, Thailand continues to grapple with weather-related disruptions, notably rains and flooding, which are impacting rubber production. The Thai Meteorological Department has warned of additional adverse weather patterns.

Weather Conditions and Production Outlook

The southwest monsoon is currently affecting northern Thailand. According to the Thai Met Department,  the southern region, the  hub of rubber production, is expected to face isolated heavy rainfall this week, raising concerns among producers regarding the potential impact on rubber harvesting and quality. A low-pressure covers upper Vietnam with thundershowers and isolated heavy rains in the upper country. The situation may cause significant disruptions in rubber supply during the launch of the season now.

Spot vs Futures Price Differentials

Over the past 20 days, the price trend of spot rubber indicates notable fluctuations in the differentials of STR20, SIR20, and AFR10 compared to TSR20. Notably, STR20 has demonstrated a strengthening trend, peaking at 163 on May 29, while SIR20 has exhibited volatility, oscillating between a low of -24 (May 6) and a high of 10 (most recent). Conversely, AFR10's differential has shown a stable yet modest recovery, reaching 8, its latest recorded price on the same date. These variations reflect the dynamic market conditions affecting rubber pricing.

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Rubber Prices Decline Amid Easing Supply Concerns and Weak Chinese Demand

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