Glut weighs on African rubber; Indo and Thai stayed strong 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, up US$17.5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$25
• Helixtap assessed AFR10 US$1360/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, down US$10

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1380/mt FOB Ho chi minh, down US$20
• Helixtap assessed SMR20 US$1420/mt FOB Klang Penang, down US$30
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.5/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1070/mt FOB Bangkok Laem Chabang, down US$5

The spot was mixed during the Asian trade day as the oversupply of African rubber weighed on the prices. Meanwhile, Thai and Indonesian rubber found some support from more robust raw material prices. The demand, meanwhile, was largely downcast. 

Indonesian and Thai rubber found support from raw materials 

While the demand was essentially unchanged, both Indonesian and Thai rubber prices found some support on account of some strength in the raw material prices owing to some slowdown in the tapping activities. 

“It is very quiet today. Due to the rainy weather, raw material supply is also very low. Most sellers are sidelining today,” said a Thai producer source. The STR 20 offers level has been strong over the week despite the tepid demand. 

There was unwillingness amid the Thai producers to lower their offers amid some appreciation in Thai Baht against the US dollar over the week. The producers were, however, struggling with limited interest and lower demand. 

Meanwhile, offers in China were also largely stable. According to Helixtap market sources, the producers feel that there is ample demand in China, so “someone or the other would be willing to buy”.

On the other hand, Indonesian rubber has been seeing some regular interest owing to being one of the economical options in Asia. The traded level for SIR 20 was reported in the range of US$1425- US$1435mt on FOB basis, almost US$10-US$20/mt higher than the previous day. 

As per Helixtap farmgate cup lump prices, there has been an uptick in the Indonesian raw material, possibly owing to ongoing wintering in part of the country. Thus, increased interest, coupled with strength in the raw material, let SIR 20 close the week on high. 

Africa struggling 

Meanwhile, African rubber struggled to find a market amid ample supply. Various market sources noted that they were struggling to reach US$1300/mt on FOB basis for AFR 10. “The physical market is very far from paper,” said a trader source. 

There is hardly any interest in African rubber as the major markets – China, Europe, and the US are struggling with various economic issues. There were offers into Europe as low as US$1295/mt on a CIF basis, indicating some distress amid some sellers.

More downside for spot; confusion around LTC negotiation on EUDR premium 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1370/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1330/mt FOB Abidjan, down US$10

The market activities remain muted with caution amid the continued absence of buyers weighing on the physical prices. The overall sentiment remained bearish, even though China and the US opted to keep interest rates unchanged. 

With already bearish demand, downcast macro indicators do not support the market sentiment.  

The US Federal Reserve held interest rates steady and continued to hold on to the hawkish monetary policy stance in an attempt to lower inflationary pressure.

In addition, Chinese regulators have started to probe some funds and brokerages, which could impact the market sentiment further. 

All these factors have resulted in some stagnation in the spot rubber market, pulling the prices down. The traded level for SIR 20 was reported in the range of US$1405- US$1415mt on FOB basis. 

The offer level for SVR 10 during the day was around US$1410/mt on FOB basis. However, it failed to attract much buying interest given SIR is at similar levels and below. 

Row over EUDR premium for LTC 2024

Meanwhile, the producers seemed busy trying to map the actual value of the "EUDR premium" for the upcoming long-term contract negotiations. While there is a vast range of numbers making rounds, as per the Helixtap ESG guide on a fixed price basis, the EUDR premium could be around US$65-US$85/mt and above. However, the premium level could be 5-6% and above on the percentage term. Some market sources feel the EUDR premium can go as high as US$200/mt and above. 

The interesting fact is that some companies are willing to offer solutions. However, a segment of producers might opt to do the mapping independently. The market's primary confusion is the traceability levels required to fit into EUDR-approved sources. 

Several producers are struggling to deal with the situation's complexity, and the industry unanimously agrees that attaining the traceability level expected by the European Commission would require both time and investment. 

According to industry sources, Thailand producers are gearing up for EUDR and possibly might be better placed than the Indonesian producers. This might lead to some shift in booking for LTC. However, the negotiations are likely to start from October, and as the market moves closer to the date, there might be more clarity.

Stagnation in the spot, buyers continued to wait 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1455/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1380/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, down US$10

There was some stagnation in the spot rubber market amid continued silence amid the buyers weighing on the physical prices during the Asian trade day. The producers were keener to adjust prices lower, resulting in a correction in prices.

Producers more amiable 

As the spill-over optimism from the Chinese fund inflow fades, the producers seemed more willing to adjust their offers to match the buying expectation. However, Vietnamese and Thai rubber continued to be on the higher end of the band. 

Indonesia seemed to have gained some market interest lately, it being the most economical option in Asia. As a result, a correction in SIR 20 prices was capped. The traded level for SIR 20 was reported in the range of US$1415- US$1425mt on FOB basis, the same as the previous day. 

However, there are some corrections in Vietnamese rubber, bringing it to par with the Indonesian level, which usually is at a discount on the SIR 20 price. The offer level for SVR 10 during the day was around US$1420/mt on FOB basis. This came as a surprise for some of the Indonesian producers who noted the situation as a “crazy turn around”.

Meanwhile, the problem of plenty continued owing to ample offers from Africa. Amid the expectation of a hawkish stance of the European central banks, the demand is sluggish. “Europe is very quiet for us. China has more potential buyers, but prices are not interesting,” said a producer source. There was a wide offer range for AFR 10, which hovered between US$1270-US$1350/mt on FOB basis. 

“There are not many movements today. It is quiet. Many are still on the wait and see (mode), and offers were more or less the same as yesterday,” added a trader source. 

The flurry of rate decisions could impact buying

China kept its lending rates unchanged, which aligned with the market expectations. As a result, there was not much impact on the physical price sentiment. However, it did help the market to arrest the drop in prices. As the Chinese economy is showing signs of stabilization amid a weakening yuan, some market participants are hopeful that there might be increased buying interest from China. However, the wide offer gap and ample inventory level limited the number of deals concluded.

Meanwhile, the market is still waiting for the Fed’s decision on interest rates, which some expect could be hawkish. The possibility of more hikes remains with the US serious about getting inflation back to 2%. The impact of rising interest rates is visible in slowing demand in the US, and the situation is similar in Europe. 

Whenever there has been a rate hike, the rubber prices have taken a hit, causing some distress in the market.

Buyers’ skpeticism widens bid-offer gap; SIR 20 gaining interest 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, steady

The push and pull in the physical rubber market continued during the day as the apprehension of the buyers over a volatile spot market deterred market activity. Meanwhile, the producers were unwilling to lower their offers, barring Indonesian producers, bringing SIR 20 back into the competition. 

Producers held on to offers, barring Indonesian producers 

There was some downward pressure on the spot market amid strengthening US dollars and the volatility in the physical rubber market. While producers from most regions opted to hold on to their offers, Indonesian producers were willing to adjust to the buyer's level. 

A Singapore-based source noted that the demand is not that good in the market today, and just a few regular buyers were active. The traded level for SIR 20 was reported in the range of US$1415- US$1425mt on FOB basis, keeping the market stable on average.

However, there seems to be some willingness to adjust the prices among the Indonesian producers. This would put them in a more competitive position in the current scenario. A buyer source noted that SIR 20 is the "cheapest grade at the moment for premium."

Meanwhile, Thai producers held on to their offers, with some offers at around US$1480/mt on FOB basis. There has been some rise in Thai cup lump prices lately, which limits the scope for the producers to adjust prices. However, the weakness in Thai bhat against the US dollar does help them to cover some of the gap. 

Vietnam offers at par with Indo

Even the Vietnamese producers were seen holding on to their offers at around US$1430/mt on FOB, the same level as SIR 20. Some sources noted that rains in part of Vietnam and the spillover reaction of the recent inflow of liquidity in the Chinese market support the prices. 

However, the buying interest continued to be limited. "Prices seem to be hovering at the moment, waiting for each side to push or pull," a producer source noted. 

China is still the best bet for African rubber 

Amid a slow-moving Europe ahead of the interest rate decisions by some of the major central banks, the African rubber continued to make its way into China, with a traded level of around US$1295/mt on a CIF basis. 

However, the offers in Europe held steady, with market participants anticipating some more interest later in the week. 

A predominant stance of wait-and-see

While the supportive policy tone in China has improved the sentiment, there is still a lot to cover for the demand to return to its pre-COVID levels. Most buyers have taken a wait-and-see approach rather than book volumes on the physical market.

Spot prices ease but correction capped on expectation of China’s revival 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, down US$20

The optimism in the physical rubber market faded during the day, with buyers primarily sidelined. However, the pace of the correction was relatively slow owing to the expectation of revival in the Chinese economy coupled with unwilling producers to adjust price levels. 

Some positive growth in the Chinese economy capped the correction 

Back-to-back monetary support from the Chinese government has sparked some hope among the market participants for a revival in Chinese demand. “I don’t think we’ll see a new low anymore. China seems to be well supported now,” said a Singapore-based source. 

In addition, better-than-expected Chinese factory output and retail sales added to the optimism. As a result, some sellers were unwilling to lower their offers as the AFR 10 was offered at US$1350/mt on CIF basis, which was the traded level at the end of last week. 

However, the sustainability of the optimism is still under question, given the overall demand is still sluggish. There is a lot of apprehension among the buyers, keeping them away from the market, Helixtap market sources noted. 

This kept the market activities muted during the day, weighing on the pricing sentiment. Prices across the board saw a correction but were relatively less steep. The traded level for SIR 20 was reported at around US$1420/mt on FOB basis. 

A producer source noted that there is not much demand, but the drop in the market is “Not too bad,” given the continued overall bearishness. 

Raw material prices up

Interestingly, both Thai and Indonesian raw material prices saw some uptick. Helixtap farmgate prices for Indonesian cup lump rose around 2% compared to the September 11, 2023 level. Despite tepid demand, the prices saw some support due to wintering in parts of Indonesia. Thailand cup lump prices also saw some rise supported by bad weather and rains. 

The uptick in raw material amid sliding processed rubber prices would dent the producers’ margins. However, some strength in the US dollar is likely to nullify the impact partially. 

All eyes on monetary decisions 

The key factor that has kept the market participants on a watch is a series of central bank meetings in Europe, the US, and Japan, one of the major rubber-consuming markets. Any hikes in the interest rates have always impacted both the prices and buying interest. 

While the market expects the Fed to keep the interest rates unchanged, with the rising oil prices, the inflationary pressure is also rising. On the other hand, the ECB is expected to hike its rates, which would impact the buying sentiment of an already slowing Europe. In addition, the Bank of Japan could also start tightening its monetary policies.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Quiet market fails to cap northbound physical prices

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1410/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1370/mt FOB Abidjan, up US$20

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1400/mt FOB Ho chi minh, up US$10
• Helixtap assessed SMR20 US$1450/mt FOB Klang Penang, up US$20
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.75/kg ex-works, up THB 1.75
• Helixtap assessed Bulk latex US$1075/mt FOB Bangkok Laem Chabang, up US$20

The absence of active buying during the Asian trade day failed to cap the optimism in the physical market despite ample offers. Backed by the optimism of more funds entering the Chinese market and an uptick in the futures, the prices across the board increased.

Volatility in the market 

"Prices between SICOM and physical are going haywire," said a trader source. The week witnessed a lot of volatility in the price. However, the overall bias was upward. There was apprehension among the buyers, which resulted in a wide bid and offer gap, especially for Thai rubber. 

According to market sources, the day's prices increased by around US$10/mt. Some of the buyer sources noted the offers from the producers are still on a higher level. However, given the oversupply, the traded levels are much lower than the offered level. 

Moreover, over the week, the rally in the futures market was more robust than the physical market. While producers tend to follow the futures, the buyers are unwilling, considering that the outlook is yet to see real promise. 

The traded level for SIR 20 during the day was around US$1430/mt on FOB basis, while the offers were around US$1440/mt on FOB basis. "Buyers are holding out in the hope that prices will come down. It's a case of who blinks first," said another trader source. 

Meanwhile, some traders were heard selling Indonesian rubber into China (INE), trying to book profits as long as the prices increased. This, however, would add to the glut, pushing the Chinese buyers away from the physical market.  

On the raw material front, there was some upward bias in the Indonesian raw material prices owing to wintering in parts of Indonesia. 

Thailand and Vietnam find support from raw material 

Owing to bad weather in Thailand and Vietnam, the tapping activities are impacted. Some producer sources noted that the raw material supply is limited, limiting any scope to lower the prices. "I feel prices may stay supported unless better weather comes through," said a Thailand-based source. 

Another Thailand-based producer source echoing similar views noted that prices have increased compared to last week with some support from limited supply. However, he added that the buying interest is still bearish. 

Helixtap STR 20 prices rose more than 7% in the initial fortnight. The offers during the day were around US$1480-US$1490/mt on FOB basis. However, there was a wide range for STR mixture offers in China, hovering between US$1440-US$1470/mt on CIF basis, with limited buying interest. 

This creates a disconnect amid the prices, which, in the future, would lead to a steep correction unless demand catches up. 

In Vietnam, SVR 10 offers increased by around US$40/mt over the week. Helixtap SVR 10 prices rose more than 6% in the initial fortnight. 

No impact of a glut on African prices

A Helixtap market source noted that "the prices are going in all directions," with a huge range of offers on the market from as low as US$1290/mt to US$1400/mt on FOB basis. Interestingly, despite ample African offers in the market, the traded level into China increased, with trades reported at around US$1350/mt on CIF basis during the week. 

Better-than-expected Chinese retail sales and industrial output for August supported the central bank's decision to cut banks' reserve ratio requirements for a second time this year. This was one of the critical reasons which kept the market sentiments buoyant.

Glut in spot market weigh on trade level; Producers unhappy 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$15
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, up US$12.5
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, up US$12.5

Glut in the physical market dampened the market sentiments, weighing on the traded levels. Meanwhile, some producers continued to raise the prices across the board in line with the uptick in futures.

Apprehension in buyers and glut weigh on the trade level

While the spot prices rallied during the Asian trade day, trades were limited or much lower than the offers. According to Helixtap market sources, SIR 20 traded at around US$1420-US$1425/mt on FOB basis. 

"The market is still looking slow… I am sensing hesitancy among the buyers today," said a Singapore-based trader. With the higher US inflation rate than expected, coupled with the anticipation around the rate decision by the ECB, there is a lot of skepticism among the buyers. There was a slowdown in Chinese buying as well during the day.

"Buying is hand to mouth for the most part. I think buyers still believe that prices could drop back to previous levels albeit gradually," said a Thailand-based source. As a result, the trading activities were slow during the day, keeping the market in more or less mute mode.

In addition, the glut situation in the physical market owing to ample offers from Africa added to the pressure on the prices. "We do know there is plenty of African TSR 10 available everywhere," said a producer source.

Some producers unwilling to nudge 

 However, the producers were unwilling to give in to the bearishness on the buy side and raised their offer level backed by the optimism in the futures market. According to Helixtap producers' sources, no one will be willing to sell at a discount, especially amid rising raw material prices. 

Offers for SIR 20 were around US$1460/mt on FOB basis. The uptick was also seen in the Vietnamese rubber, with offers around US$1440/mt on FOB basis. 

Interestingly, despite ample offers and slow buying from its major market, African rubber offers were northbound. Offers into Europe were around US$1400-US$1410/mt on CIF basis, and to China around US$1320/mt on CIF basis. 

Market confidence low 

The Japanese are struggling with low confidence on worries that a slowdown in China's economy could have a severe impact on global and domestic growth.

Meanwhile, the European Commission would investigate subsidies provided by China to electric car makers like BYD. China mentioned that this would impact the country's relations with Europe. Such a tiff could be detrimental to the rubber market as it has been banking big on the rise of EV vehicles amid a slowdown in global demand.

Spot prices downcast; apprehension amid buyers around US inflation 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1377.5/mt CFR Hamburg Rotterdam, down US$12.5
• Helixtap implied AFR10 US$1337.5/mt FOB Abidjan, down US$12.5

The spot market slowed down as the buyers continued to stay out of the market during the Asian trade day. Further adding to the pressure is the upcoming US inflation data, which has resulted in some skepticism among buyers. Meanwhile, the producers tried to adjust the offers, but the correction was minimal. 

Asian Spot corrected but not a steep drop

The physical rubber prices slid during the day, but the drop was marginal for the Asian rubber. While the traded level for SIR 20 hovered in the range of US$1415-US$1425/mt on FOB basis, STR offers dropped by around US$10/mt. The demand was primarily muted, with some buying from the buyers filling in the immediate requirement. Meanwhile, most tire makers opted to stay on the sidelines, waiting for more stability in the market. 

A Singapore-based source noted that the market is still very quiet, and he does not expect the activities to pick up at least this week. 

The Vietnam rubber prices were also holding up with offers around US$1400/mt on FOB basis despite some slowdown in Chinese buying. "The prices are holding up for now it is, but the sellers would be willing to lower the offer for a serious interest," said a trader source. 

African rubber under pressure 

However, the African offers saw a sharp correction amid muted demand from China, Europe, and Africa. The African offers are "quite cheap" compared to other sources, Helixtap sources said. With some slowdown in the buying from China during the day and ample supplies in the market, the producers lowered their offers to attract buying. 

Meanwhile, rising inflationary pressures on the US and the expectation of more monetary tightening in Europe have limited the buying interest for the tire makers from the region. Germany, one of Europe's major automakers, has seen a drop in overall factory orders in August. This further underscores the bearishness in the European economy, a key market for African rubber. 

Mix macro news adds to the apprehension 

While the market participants await the US Consumer Price Index (CPI) report due today, there is an expectation of some uptick in headline inflation largely driven by elevated oil prices. This might result in the Fed further tightening the market liquidity, which would be detrimental to the overall demand. 

On the other hand, China's central bank has assured fiscal and industrial policies to boost demand and support the economy. China has lately out a series of measures to pump liquidity into the market. While it boosted the market due to tepid demand, the uptick was unsustainable.

African offers add on to the glut weighing on spot; Chinese buyers opt for domestic options

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1415/mt FOB Belawan Surabaya, down US$25
• Helixtap assessed STR20 US$1455/mt FOB Bangkok Laem Chabang, down US$25
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, down US$20

Ample offers for African rubber and some desperation amid some producers weighed on the physical market during the Asian trade day, while buyers opted to sideline and China shifted to warehouse cargoes. 

Volatility back in the physical market owing to no fundamental support

Some of the major tire makers opted to stay away from buying amid the global monetary tightening. The market participants await clarity on the stance of the Fed, ECB, and Bank of Japan. With the market confidence waning amid a lack of actual demand, the producers tried to adjust their offers but failed to attract any buying interest. 

According to Helixtap market sources, the buyers with limited spot booking are the ones buying in the physical market at the moment. Otherwise, the major tire makers are moving slowly with the liquidity crunch owing to rate hikes in the Western market. 

The market lacks actual demand, while there are ample offers, especially from Africa. 

African rubber adding to the glut 

Over the past couple of months, since Africa has been out of wintering, the physical rubber market has been under pressure owing to the increased outflow of cargoes from Africa. There is a wide range of offers in the market ranging from US$1270-US$1370/mt on FOB basis.

According to trader sources, they are struggling to sell into China. “There is still demand in China, but the bid level is too low, and there are hardly any deals in the market. It seems supply is more than demand,” said a Singapore-based trader. He added the buying interest from AFR 10 is around US$1280-US$1310/mt on CIF basis. 

China is more interested in warehouse cargoes 

While the Chinese physical buying has slowed this week, the uptick in the SHFE is leading the physical market to hold on to the optimism. A China-based source noted that the Chinese market is quiet this week. The Chinese buyers have very low confidence in the physical market now, and with ample cargo available domestically, they are opting to buy from the warehouse.

The STR 20 mixture offered domestically is around US$1450-US$1470/mt, which is almost at par with FOB level of STR 20, denting its chance to move into the Chinese market. Another Singapore-based trader noted that the discounts are widening, and the current market volatility is worsening the situation.

Macro factors to impact sentiment

The market, meanwhile, is waiting for US CPI data and the ECB’s decision on rate hikes. With the US data bringing more clarity on FED’s stance on its monetary policies, the market expects the ECB to keep rates steady.

Strong start for spot market; apprehension looms large too 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1440/mt FOB Belawan Surabaya, up US$20
• Helixtap assessed STR20 US$1475/mt FOB Bangkok Laem Chabang, up US$15
• Helixtap assessed AFR10 US$1410/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1370/mt FOB Abidjan, up US$20

The spot rubber market had a strong start despite buyers being cautious despite some weakening in the US dollar. However, there was some nervousness in the market around the sustainability of the prices as there were lower offers making rounds in the market. 

Apprehension looms large 

There was strength in the spot market, which was partially driven by the futures and partially driven by the carry-over optimism of the funds entering into the Chinese market in the last week of August. 

The traded level for SIR 20 was reported at US$1440/mt on FOB basis, which is significantly higher than the traded level at last week's close. Thus, it is clear that there is some demand. However, buying is largely triggered by immediate requirements. 

"The buyers are holding back, but only essential purchases are taking place. I didn't hear of any deals concluded today," said a trader source. The market activities were slightly slow during the day. 

Helixtap market sources noted that the market was slow due to the uptick in the spot rubber prices and other macro factors despite the weakening of the US dollar. 

The uptick was seen in the African rubber prices, too. However, the Chinese rubber factories, apparently, are holding back and are not too keen on making immediate buying. "The China market is observing. There is no actual trade in the market today," said a Singapore-based source. 

Meanwhile, there are ample offers in the market, which will likely weigh on the market sentiment as the market confidence is still low. The financial conditions continued to tighten globally, and the market awaits some Chinese economic data throughout the week. As a result, the buying is likely to remain tepid.

The upcoming ECB rates decision, with expectations of another round of hikes and the rally in crude oil prices, would further impact the buying sentiment. In addition, the market expects the US core consumer price index to rise in August, which might bring the Fed hikes back, further tightening the liquidity in the market.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Slight slowdown in spot prices brought buyers back 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1390/mt FOB Ho chi minh, up US$70
• Helixtap assessed SMR20 US$1430/mt FOB Klang Penang, up US$80
• Helixtap assessed TSR 20 US$1430/mt CIF China, up US$50

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, up IDR 1400
• Helixtap assessed Thai raw material THB 41/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1055/mt FOB Bangkok Laem Chabang, up US$45

A slight slowdown in the uptick in the spot prices brought some buyers back into the market during the Asian trade day. Meanwhile, raw material prices firmed up during the week on unseasonal rains in Thailand and wintering in parts of Indonesia. 

Active Chinese kept the market sentiment upbeat

Post the influx of funds into the market late last week, the spot rubber prices have significantly recovered across the board. While the market sources noted that Chinese buying is still active, it has mostly been traders. The Chinese tire makers were relatively slow during the week, waiting for the prices to steady. 

The heightened interest from China was not only restricted to African rubber, but according to Helixtap market intelligence, there was also interest in Thai and Vietnamese rubber. Offers for SVR 10 into China were reported at around US$1330/mt on CIF basis, while for STR mixture were around US$1450-US$1470/mt, on CIF basis. 

Meanwhile, there were ample offers for African rubber in the Chinese market, with offer levels ranging from US$1270-US$1305/mt on CIF. Thus, it is evident that there is ample supply in the market, and any shift in demand from the current situation would lead to a steep correction in the prices. 

However, the prices have found a new support level at around US$1300/mt mark, which the producers would like to hold on to, given the uptick in the raw material prices. In addition, the buyers are also accepting the elevated spot levels, resulting in increased market activities. 

Some producer sources noted that they are seeing some improvement in margins with the better prices. There was also some interest from the major tire makers during the day. However, unlike other regions, Indonesian prices saw some correction as some producers were willing to lower offers to move volume. Thus, the traded level dropped to US$1410-US$1425/mt on FOB basis from US$1430/mt earlier this week. 

Nevertheless, there is still some optimism in the market, but the apprehension of the optimism continuing in the next week is also predominant. 

Rising raw material prices

In line with the processed rubber market sentiment, raw material prices also saw northbound movement during the week. With wintering in parts of Indonesia, Indonesian cup lump prices rose by more than IDR 1000/kg. Helixtap Indonesian farmgate cup lump prices increased by around 2% in September.  

The situation was similar in Thailand as well. With rains in southern Thailand, the production is still low. “It is still raining in the South of Thailand; hence, the supply is limited, and field latex prices have gone up to THB 47-48/kg level,” said a producer source.

Spot market stays strong despite China slowing down 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, up US$20

The physical market continued to rally north during the Asina trade day despite some slowdown in China's sentiment, while a stronger US dollar dented the buying capacity. 

While the producers and sellers continued to ramp up their prices to match the future market rise, the buyers remained apprehensive. "I think physical prices are up but can't go up as fast as in the future," said a Singapore-based source.

Meanwhile, some trades were reported for SIR 20 hovering in the wide range of US$1425-US$1440/mt on FOB basis. 

The situation was the same for Thailand as well, wherein higher trade levels were reported.

Some of the buyers are unwilling to bid at higher levels. However, some larger Indonesian producers are also accepting the lower bids, which is widening the traded level for Indonesian rubber.

While the sentiments remained mixed during the day, Helixtap market sources noted that the market is mostly up but unrelated to rubber as the demand is still inadequate. Meanwhile, an Indonesian producer pointed out that the off-take is slow, which is confusing the market even more. 

There was some improvement in the market activities as some buyers tried to accept the elevated physical levels. Still, the fact that the current rebound is artificial and not triggered by actual market sentiment capped the uptick. 

African producers, too, noted that the prices have firmed up and continue to do so, but the buyers, especially from China, are slowly stepping back. A producer source noted that there are offers for AFR 10 at around US$1270/mt on CIF basis, but wondered if any buyers would be interested in these levels.

 "The physical prices totally gave way today in the Chinese market as China physical prices are lower than the futures," said a trader source. 

Eyes on US inflation level

Signs of continued inflationary pressures in the US have heightened the tension amid the market of higher interest rates to sustain for longer. Meanwhile, a stronger US dollar dented into the buying capacity, even though it does bring in some pause for the producers who can book slightly better margins based on the forex difference. 

"Today, the driving factor across the world is to keep inflation under control. In the case of Japan, the Yen effect is an additional factor for the consumer," said another trader source. 

Furthermore, poor Chinese economic data and the absence of a large package to stimulate the Chinese economy is also not helping to support the sentiment.

Optimism back in spot, buyers still weary 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$40
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, up US$15
• Helixtap assessed AFR10 US$1370/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1330/mt FOB Abidjan, up US$10

The spot market saw a slight uptick in prices as the producers tried to latch on to the optimism in the market, even though most buyers opted to hug the sideline. Evidently, the current spike is largely sentiment-driven and unlikely to sustain until next week. 

Market participants skeptical 

There is a lot of apprehension among the market participants as they do not see any actual demand to support the strength in the physical market. A trader source noted that the market is a lot weaker than it actually seems, and there are a lot of sellers but no buyers with the rise in the prices. 

“The Chinese market does not seem good, but some traders are still buying. But we need to be more careful about the payment,” another trader source added. The market activities were muted with most of the major tire makers still sidelined. 

A Thailand-based source feels that the buyers might opt to stay out of the market this week, adding: “I suspect it (market) will remain quiet for this week.”

However, it underlines that the tire makers are possibly well-stocked, which is why there is no rush to buy at the moment. Even though the SHFE stock level saw a marginal drop last week, that is not strong enough to support the sudden price surge. 

SIR holding strong 

Despite the skepticism among the buyers, Indonesian rubber prices continued to stay strong during the Asian trade day, with the traded level reportedly at US$1430/mt on FOB basis. “I heard SIR 20 is offered at a price above US$1400/mt level,” said a Singapore-based trader, doubting if the price surge would continue. According to Helixtap farmer data, the upward bias in Indonesian farmgate cup lump post the funds entering the Chinese market also supported SIR prices.

There was slight support for the African rubber prices as well. An Africa-based source noted that the buyers are watching while the price increases. There is some interest from China with offer levels for AFR 10 around US$1290/mt on CIF basis. The sellers tried hard to carry forward the rise in the prices seen over the past few days. 

However, some sources noted that they think traders or importers would prefer to avoid buying at such levels in China. However, the overall demand or buying interest was muted, limiting the market activities. 

Macro indicators are still weak

The market confidence is faltering amid heightened concerns about global economic momentum, while the dollar firmed further, weighing in the buying capacity. 

With the Chinese decline bigger than expected, the market expects the government to be more proactive to make a difference in the demand situation. Meanwhile, German, Britain and the Eurozone manufacturing data showed declines, underscoring the overall bearishness in the market.

China optimism dissipates, spot southbound; no impact of SIAT sell off

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1390/mt FOB Belawan Surabaya, down US$20
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1360/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1320/mt FOB Abidjan, down US$20

The spot rubber market slowed as the optimism around China fizzled out during the day amid weak PMI data. With both buyers and sellers away, the market awaited some stability. Meanwhile, amid the bearishness, the news of Saroafrica acquiring 86.7% of the Siat group failed to stir any reaction. 

Apprehension weighs on over-optimism

The market participant, irrespective of buyer or seller, opted to stay on the sidelines amid the artificial uptick in the spot prices. With the fundamentals still weak, it was evident that the prices would see correction dropping back to the reasonable levels. 

According to Helixtap market sources, the market was extremely quiet today. With most of the major tire makers out of the market, the producers also seemed confused about what level to offer at the market. 

Meanwhile, the African offers saw around US$20/mt drop during the day. However, offers into China saw a less steep correction owing to some lagging effect of the funds pumped into the Chinese market. A trade for AFR 10 was reported at US$1295/mt on CIF basis. 

"I don't see any buying happening at these prices. Even the producers themselves don't believe this price jump is sustainable. Everybody is in a wait-and-watch mode," said a Thailand-based source.

Amid the confusion and skepticism in the market, weak Chinese PMI data added to the pessimism in the market. The weak demand in China weighed on the services activity, which expanded at the slowest in eight months in August, underscoring that the stimulus failed to revive consumption.

The slowdown in the services sector offset the improvement in manufacturing production and demand, keeping the Chinese economy downcast. 

SIAT's sell-off to Saroafrica had no impact on the market

Saoafrica, a Nigerian family-owned group, recently acquired 86.7% of the Belgian company Siat (Investment Company for Tropical Agriculture), specializing in producing rubber and palm oil in West Africa.

Several market sources confirmed the same and noted that it had little effect on the physical market, which is already struggling with tepid demand. 

Siat has been struggling financially, which resulted in selling the stakes, said a trader source, adding they stopped the Compagnie Hévéicole de Cavally (CHC) operation for nearly two years. Only Gabon still operates around 20,000 mt per year.

According to Helixtap market intelligence, Siat group has been dealing with financial issues since the repurchase of the shares from Halcyon. In 2017, HALCYON Agri Corporation Limited sold its stake in SIAT SA, owned by GMG Global Ltd, representing 35% of the issued and paid-up capital in SIAT SA, which was completed on Sept 29, 2017. 

A Singapore-based source noted it is a decent deal as Gabon is still "technically still less crowded" than Ivory Coast. Siat has some 40,000 hectares of oil palm plantations and some 5,500 hectares of rubber plantations. 

The transaction is expected to be finalized in the first quarter of 2024 following approval from the Nigerian competition authorities.

Chinese stimulus boosted the prices, uptick stronger than 2021

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, up US$60
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$85
• Helixtap assessed AFR10 US$1380/mt CFR Hamburg Rotterdam, up US$85
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, up US$85

The physical rubber market rallied during the Asian trade day as the support from China kept the market sentiments buoyant even though the demand had not improved. Meanwhile, most buyers opted to hug the sidelines, awaiting price stability. 

The impact of the stimulus on rubber 

The prices continued north as the market seemed high on China stimulus optimism. Once again, the prices were largely driven by the sentiment rather than the actual demand in the market. 

Prices across the board saw a rise in the range of 6%-12%, with African rubber seeing the highest jump and Indonesian rubber finding the least support. 

"I see funds buying like crazy now. Again, artificial situation. Don't know how long this will continue," said a producer source. The lack of demand does bring skepticism in the market. However, it did not deter the producers from joining the ride with the traded level for the STR 20 mixture, seeing a steep rise to US$1430/mt on CIF basis. 

According to Helixtap market sources, even the warehouse cargoes are trading at higher prices. A trader source noted that funds entered the market on August 31, 2023, which propped up the market. 

Another trader noted that SVR 10 has been inching up, but since Vietnam is on holiday until September 5, the uptick is capped. "Between September 1 and September 4, Vietnam sellers have raised prices by $70-80/mt. Thai prices are also higher by around the same," a Thai-based trader noted. 

What did China do?

Last week, China stepped up measures to boost the downcast economy, with top banks cutting lending rates and expecting further support for Beijing, including relaxing restrictions on home purchases. This move supported the ailing Chinese property market, weighing heavily on market sentiment. 

Rally much stronger than 2021

Compared to a similar situation in 2021, the prices saw a much stronger rally this year. 

According to Helixtap data, STR 20 prices were up by 5% on a month-on-month basis in October 2021. SIR 20 was assessed as 2% higher, while AFR 10 prices rose 3% after some speculative buying from China, which has created havoc in the market with talks that fund bought more than 200,000 tons at the Shanghai Future's Exchange.

The overall sentiment, however, is the same, that the situation is unrealistic. Some producers were confused about what level to peg the offers. Most of the market sources noted that there are hardly any buyers in the market, limiting the trading activities during the day. 

Even Helixtap farmers' data showed some uptick in sentiment, with Indonesian farmgate prices significantly rising.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Physical prices piggybacks on optimism in China but losing steam

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1350/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1365/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1295/mt CFR Hamburg Rotterdam, up US$15
• Helixtap implied AFR10 US$1255/mt FOB Abidjan, up US$15

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1320/mt FOB Ho chi minh, up US$20
• Helixtap assessed SMR20 US$1350/mt FOB Klang Penang, up US$10
• Helixtap assessed TSR 20 US$1380/mt CIF China, up US$70

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 18,300/kg ex-works, up IDR 500
• Helixtap assessed Thai raw material THB 39.75/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1010/mt FOB Bangkok Laem Chabang, up US$15

The physical rubber market saw much-needed optimism during the week, primarily driven by the optimism in China. Meanwhile, the overall demand is yet to pick up, which will likely cap a strong rebound in the market. 

African rubber saw maximum support

Being the most economical option for China, African rubber over the week witnessed maximum support compared to other sources. According to Helixtap market sources, “China market hot.” There has been some increase in inquiries from Chinese buyers. 

The uptick has been a culmination of several factors. Lower prices are one of the main reasons for the increased inflow of African rubber into China in 2023. The spread between the AFR 10 vs. STR 20 and SIR 20 is still wide, with levels similar to December 2021. The average gap between STR 20 and AFR 10 for August is around US$133/mt, and the gap between SIR 20 and AFR 10 is around US$131/mt.

In addition, another major factor impacted the Chinese government's efforts to inject liquidity into the market even though there is still contraction as per the official Purchasing Managers' index (PMI).

However, market participants noted some new orders that could indicate improvement. The factory activities continued to shrink in August, maintaining the pressure on the Chinese government to continue supporting the economy. The traded level for AFR 10 this week was in the range of US$1230-US$1250/mt on a CIF basis. However, some market sources say that Chinese buyers are not chasing physical cargo yet. 

Indian demand is not strong enough 

Meanwhile, African rubber has also been moving into India and at a slightly better price than China. There have been trades into India this week, but the volume has been much smaller. India is still a very small buyer in the rubber market, accounting for around 5% of the market. 

A trader source noted that there has been some dip in Indian buying this year compared to last year. According to Helixtap analytics, India usually bought 60,000 mt per month, which has dropped to around 40,000 mt per month in 2023. 

Thai market finds support from raw mat and Chinese interest 

The Thai market continued its upward trend with support from Chinese buying interest and an uptick in raw material prices. With aggressive Chinese buying, STR 20 mixture prices saw a reasonable rise this week, with trades ranging from US$1360US$1410/mt on a CIF basis. 

"It (uptick in the Chinese buying) was encouraging but seems to be losing steam," said a producer source. There has also been interest in latex, but the producer sources noted that the volume has slowed comparatively. 

Meanwhile, rains continued in Thailand, keeping the tapping activities slow. As a result, their raw material prices continued their northbound movement. "Weather forecast is rain for a few more days, but you can never be certain these days," the producer source added. 

Indonesian rubber volatile 

The Indonesian rubber market also found some support due to the overall optimism in the market. However, with the international market still downcast, price volatility continued. Even though there has been some pick-up in demand, mainly from some significant tire makers, there is doubt about the sustainability of the optimism in the market.

In addition, there has been some uptick in the Indonesian imports of African raw materials lately, which might allow some producers to lower their offers to compete with African rubber.

No impact of political unrest in Africa on spot market 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1360/mt FOB Belawan Surabaya, up US$10
• Helixtap assessed STR20 US$1365/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, down US$10

The escalating political unrest in West Africa failed to support the rubber physical market during the Asian Trade Day. However, the prices remained mixed on the lingering effect of the Chinese government initiative to support the economy even though the buying continued to be lackluster. 

No threat to African production yet

The announcement of the Gabonese military that they had taken over the power after the state election body announced President Ali Bongo, has resulted in some political tension in the region. With West Africa being the major rubber-producing region of Africa, there were some concerns among the market participants. 

However, according to Helixtap's market intelligence, there has not been any immediate impact on rubber production in the region. Even though some of the major producers have their processing plants in Gabon, the sources confirmed that there has not been any disruption. 

A producer source noted that the situation is relatively calm in the region, and everyone is waiting for more clarity. Helixtap market sources said that their situation in Ivory Coast is normal. "Niger is a bigger risk. Gabon, not so much and no impact on Ivory Coast," said another producer source. 

The situation is contained, but such unrest could lead to instability in the short to mid-term period. Market sources noted that if the problem continues, investor confidence will be shaken, which would be detrimental to the African rubber economy, which is currently booming.

"If the unrest spreads in Ivory Coast, it will be big news," said a trader source. Meanwhile, African prices have lately seen some support in line with the uptick in Chinese stimulus news. While spot demand is still sluggish owing to weakness in European and US demand, there is some interest in forward cargoes. 

A trade for the November shipment of AFR 10 was reported at US$1230/mt on a CIF basis. However, selling into China is still tricky as the current stock in port is at a high level, another producer source noted. 

Increased imports of African raw materials into Indonesia

There has been some uptick in the Indonesian imports of African raw materials lately. According to customs data, between January and April 2023, Indonesia surpassed the import volume of raw materials in the whole of 2022 from the Ivory Coast. 

"It is harder to get African cup lump now because Indonesia is buying up a lot!" said the trader source. Meanwhile, the traded level for SIR 20 during the day continued to rise to US$1360/mt on FOB basis, with market sources noting that buying has improved during the day.

Optimism across the board, no support from fundamentals 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1350/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1365/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1290/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1250/mt FOB Abidjan, up US$10

The optimism across the board was seen in the physical market during the Asian trade day, with the demand continuing to remain bearish. While the market participants noted that some buyers were sidelined, prices were primarily driven by market sentiments.

The producers also seemed content with the uptick in the raw materials prices. While rain disrupted the Thai market, which has been northbound since last week, Indonesian raw material was also seen catching up. “It (Indonesian cup lump) went up from below IDR 18,000 to above 18,000/kg. The prices are more aggressive in Palembang,” said a producer source. 

However, there still seems to be some doubt about the sustainability of the current price rebound as the market fundamentals do not support it. 

There were hardly any trades reported in the market as the buyers opted to hug the sidelines in a northbound market. Thai producers also raised their offers to US$1370-US$1380/mt on FOB basis. 

There have been reports of some support in the Thai raw material prices due to rains and support from the futures market. 

The prices are still at the lowest level in 2023. On average, both SIR and STR prices are around at the December level. However, African rubber is still at its lowest since 2021. The gap between the SIR and STR has reversed from (-) 36/mt in August last year to at par. 

However, a significant shift happened in the AFR 10 price trend as the gap between SIR and STR with AFR 10 ranged between US$90-US$127/mt in August 2022 to around US$136/mt.

China is slowly picking up 

Market sources noted that there has been some uptick in the buying sentiments. The trader sources pointed out that the sentiments have slightly improved compared to two weeks ago. However, Chinese buyers are still moving slowly. "They (Chinese buyers) have not caught up with the price increase," said a Singapore-based trader.

The market lately has seen some sentimental support from China's efforts to boost the battered economy and lift confidence in the country. However, the latest property crisis, weakness in the Yuan, and poor domestic demand suggest China would remain a key source of global market volatility.

The market participants expect September to bring more clarity around the underlying market sentiment. The market sources noted that this is just an initial market jump, but it is unlikely to match the expectations for a more robust stimulus.

In addition, the US jobs data released at the end of the week may offer some clues on the US economic situation.

SUBSCRIBER'S NOTE: Please note on August 24, the prices assessment publication was slightly delayed owing to technical difficulties. 

The assessment for August 24 was published as below –

• Helixtap assessed SIR20 US$1340/mt FOB Belawan Surabaya, up US$15
• Helixtap assessed STR20 US$1340/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1230/mt CFR Hamburg Rotterdam, up US$40
• Helixtap implied AFR10 US$1190/mt FOB Abidjan, up US$40

Market perplexed on the price support despite bearish China 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1345/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1360/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1280/mt CFR Hamburg Rotterdam, up US$25
• Helixtap implied AFR10 US$1240/mt FOB Abidjan, up US$25

The physical market continued to find some support during the Asian trade, which has put the market participants in a spot as there is hardly any support in terms of fundamentals or macro indicators. 

According to Helixtap market sources, there are some increases in inquiries. However, nothing could be significant to move the market up or hold on to the optimism. This newfound confidence in the futures market, which is trickling into the physical market, has confused some market participants. 

A bird's eye view shows that most factors that could drive the market are downcast. While the buying is minimal, the market is oversupplied. However, some speculations in the market are triggering optimism. 

One of them is the expectation of rotation in the Chinese market, which has propped up the sentiment to the extent that there was a slight rebound in the bid level. While some market sources noted that the physical would follow the optimism in the future, others believed the Chinese government's moves to support the economy and yuan are impacting the sentiment. 

The traded level for SIR 20 was around US$1345/mt on FOB basis, said a trader source, adding that the buying is still dull and there are hardly many active buyers in the market. Thus, it is clear that the current rebound is more of technical support and a knee-jerk reaction to the Chinese economic news. 

There was some uptick in the African offers into Europe, even though the demand from Europe has yet to show any significant recovery in demand. Instead, the region is struggling with monetary policies and inflationary pressure. The offer level for AFR 10 in the European market was in the range of US$1290-US$1300/mt CIF European main ports. 

China's government stimulus would take time to impact 

The market is seeing some support with the news of the Chinese government trying to support the economy. The impact would take a couple of months to impact the demand and the industries, especially when the export market is still slow. 

While the Chinese government is trying to inject money into the economy, the macroeconomic indicators are still bearish with the contracting manufacturing activities. Interestingly, tire exports and rubber imports have seen some uptick in July, which means the demand is slowly reviving, but the pace is much slower to sustain a rebound in the rubber market. 

Meanwhile, there is still caution around the Western markets ahead of European and U.S. economic data expected later in the week, which could clarify the stance of the central banks.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Support for spot unlikely to last; LTC negotiations look challenging  

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1345/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1350/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1255/mt CFR Hamburg Rotterdam, up US$25
• Helixtap implied AFR10 US$1215/mt FOB Abidjan, up US$25

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1300/mt FOB Ho chi minh, up US$45
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, up US$40
• Helixtap assessed TSR 20 US$1310/mt CIF China, down US$10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 17,800/kg ex-works, down IDR 200
• Helixtap assessed Thai raw material THB 38.5/kg ex-works, up THB 1
• Helixtap assessed Bulk latex US$995/mt FOB Bangkok Laem Chabang, up US$70

The physical market found some technical support this week, despite the demand seeing not much improvement. However, the producers and traders noted that there is little interest in long-term contracts. 

With the existing price volatility, the traders do not seem too keen on any volume on term contracts. In addition, with the European deforestation law in the implementation process, there is a lot of talk and confusion around the premiums. 

While the market sources noted that there are lots of talks around certifications and compliance at the moment, a substantial move has yet to be made. Such confusion was expected for the term contract this year. However, given the bearish global economic outlook, the producers would struggle during this year's negotiations.

Even though auto sales have seen slight optimism lately, most of the tire makers seem to be well stocked and prefer booking as per requirement from the spot. Moreover, the downcast spot prices make it more economical to buy on the spot. 

With China on mute mode for nearly half a year, the market has ample supply, which is topped by rising production and higher yield from Africa. According to Helixtap market intelligence, African rubber would supersede Indonesian production eventually. 

With some tire makers willing to look into alternative sources to reign in the cost, the premium that Indonesian rubber enjoys is diminishing in terms of prices and preferred sources. 

SIR 20 prices peaked this year at the end of January and, since then, have seen a correction of around 9%. The correction in AFR 10 was the highest to the tune of 14%, and for STR 20, around 11% over the same period. Such a price movement underscores SIR 20 losing its competitive edge in the market.   

Moreover, with more than a year into negative margins, there has been ample permanent/temporary shutdowns of factories in Indonesia. Some of the Helixtap market sources noted that around 45 factories have shut down in Indonesia recently.  

The margin pressure is also weighing on the Thai producers, who have been struggling the most due to limited Chinese buying interest and increased competition from Africa. Meanwhile, recently, there have been reports of rains which has impacted Thai production, lending some support to both cup lump and latex prices. Producers attributed the uptick to the rain and also higher future markets.

Slight uptick in spot on weaker USD 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1340/mt FOB Belawan Surabaya, up US$15
• Helixtap assessed STR20 US$1340/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1230/mt CFR Hamburg Rotterdam, up US$40
• Helixtap implied AFR10 US$1190/mt FOB Abidjan, up US$40

The spot market saw slight support during the day amid improved buying capacity triggered by some weakness in the US dollar. Meanwhile, on the raw material front the situation was mixed. On one hand there were some reports of rains in Thailand, on the other hand, Indonesian raw material prices saw some correction. 

It is interesting that the overall global economic cues continue to be weak, there has been slight uptick in the physical prices. This means that the market is finding some technical support irrespective of the macro-economic challenges. 

The traded level for SIR 20 moved up to US$1340/mt on FOB basis, while offers for STR were also higher at around US$1350-US$1370/mt on FOB basis.

The situation was similar for African offers as well. It is not that there has been a significant rise in buying volume but there has been some improvement in car sales and shipments globally. This is an indicator of some stability in demand. It is not strong enough to result into a rebound in prices but at least can arrest the correction for a bit. 

China still posing a challenge

Meanwhile, China’s economic challenges led to a rise in deflationary concerns, and some market participants feel it can accelerate in the coming quarters. The deteriorating economic fundamentals have become apparent in recent months, with weak July data. 

Even though some of the headline weakness was driven by lower energy prices, core inflation has been weighed down by ailing property sector. The persistent deflation in China could spill over to the developed markets, as a weaker yuan and elevated inventory-to-sales ratios lower the cost of Chinese goods abroad.

`

There has not been much change in the Chinese buying as despite the weakness in the US dollar, Yuan was still downcast, keeping overseas rubber offers higher than expected. 

Glut weighs on African rubber; Indo and Thai stayed strong 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, up US$17.5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$25
• Helixtap assessed AFR10 US$1360/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, down US$10

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1380/mt FOB Ho chi minh, down US$20
• Helixtap assessed SMR20 US$1420/mt FOB Klang Penang, down US$30
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.5/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1070/mt FOB Bangkok Laem Chabang, down US$5

The spot was mixed during the Asian trade day as the oversupply of African rubber weighed on the prices. Meanwhile, Thai and Indonesian rubber found some support from more robust raw material prices. The demand, meanwhile, was largely downcast. 

Indonesian and Thai rubber found support from raw materials 

While the demand was essentially unchanged, both Indonesian and Thai rubber prices found some support on account of some strength in the raw material prices owing to some slowdown in the tapping activities. 

“It is very quiet today. Due to the rainy weather, raw material supply is also very low. Most sellers are sidelining today,” said a Thai producer source. The STR 20 offers level has been strong over the week despite the tepid demand. 

There was unwillingness amid the Thai producers to lower their offers amid some appreciation in Thai Baht against the US dollar over the week. The producers were, however, struggling with limited interest and lower demand. 

Meanwhile, offers in China were also largely stable. According to Helixtap market sources, the producers feel that there is ample demand in China, so “someone or the other would be willing to buy”.

On the other hand, Indonesian rubber has been seeing some regular interest owing to being one of the economical options in Asia. The traded level for SIR 20 was reported in the range of US$1425- US$1435mt on FOB basis, almost US$10-US$20/mt higher than the previous day. 

As per Helixtap farmgate cup lump prices, there has been an uptick in the Indonesian raw material, possibly owing to ongoing wintering in part of the country. Thus, increased interest, coupled with strength in the raw material, let SIR 20 close the week on high. 

Africa struggling 

Meanwhile, African rubber struggled to find a market amid ample supply. Various market sources noted that they were struggling to reach US$1300/mt on FOB basis for AFR 10. “The physical market is very far from paper,” said a trader source. 

There is hardly any interest in African rubber as the major markets – China, Europe, and the US are struggling with various economic issues. There were offers into Europe as low as US$1295/mt on a CIF basis, indicating some distress amid some sellers.

Quiet market fails to cap northbound physical prices

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1410/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1370/mt FOB Abidjan, up US$20

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1400/mt FOB Ho chi minh, up US$10
• Helixtap assessed SMR20 US$1450/mt FOB Klang Penang, up US$20
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.75/kg ex-works, up THB 1.75
• Helixtap assessed Bulk latex US$1075/mt FOB Bangkok Laem Chabang, up US$20

The absence of active buying during the Asian trade day failed to cap the optimism in the physical market despite ample offers. Backed by the optimism of more funds entering the Chinese market and an uptick in the futures, the prices across the board increased.

Volatility in the market 

"Prices between SICOM and physical are going haywire," said a trader source. The week witnessed a lot of volatility in the price. However, the overall bias was upward. There was apprehension among the buyers, which resulted in a wide bid and offer gap, especially for Thai rubber. 

According to market sources, the day's prices increased by around US$10/mt. Some of the buyer sources noted the offers from the producers are still on a higher level. However, given the oversupply, the traded levels are much lower than the offered level. 

Moreover, over the week, the rally in the futures market was more robust than the physical market. While producers tend to follow the futures, the buyers are unwilling, considering that the outlook is yet to see real promise. 

The traded level for SIR 20 during the day was around US$1430/mt on FOB basis, while the offers were around US$1440/mt on FOB basis. "Buyers are holding out in the hope that prices will come down. It's a case of who blinks first," said another trader source. 

Meanwhile, some traders were heard selling Indonesian rubber into China (INE), trying to book profits as long as the prices increased. This, however, would add to the glut, pushing the Chinese buyers away from the physical market.  

On the raw material front, there was some upward bias in the Indonesian raw material prices owing to wintering in parts of Indonesia. 

Thailand and Vietnam find support from raw material 

Owing to bad weather in Thailand and Vietnam, the tapping activities are impacted. Some producer sources noted that the raw material supply is limited, limiting any scope to lower the prices. "I feel prices may stay supported unless better weather comes through," said a Thailand-based source. 

Another Thailand-based producer source echoing similar views noted that prices have increased compared to last week with some support from limited supply. However, he added that the buying interest is still bearish. 

Helixtap STR 20 prices rose more than 7% in the initial fortnight. The offers during the day were around US$1480-US$1490/mt on FOB basis. However, there was a wide range for STR mixture offers in China, hovering between US$1440-US$1470/mt on CIF basis, with limited buying interest. 

This creates a disconnect amid the prices, which, in the future, would lead to a steep correction unless demand catches up. 

In Vietnam, SVR 10 offers increased by around US$40/mt over the week. Helixtap SVR 10 prices rose more than 6% in the initial fortnight. 

No impact of a glut on African prices

A Helixtap market source noted that "the prices are going in all directions," with a huge range of offers on the market from as low as US$1290/mt to US$1400/mt on FOB basis. Interestingly, despite ample African offers in the market, the traded level into China increased, with trades reported at around US$1350/mt on CIF basis during the week. 

Better-than-expected Chinese retail sales and industrial output for August supported the central bank's decision to cut banks' reserve ratio requirements for a second time this year. This was one of the critical reasons which kept the market sentiments buoyant.

Slight slowdown in spot prices brought buyers back 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1390/mt FOB Ho chi minh, up US$70
• Helixtap assessed SMR20 US$1430/mt FOB Klang Penang, up US$80
• Helixtap assessed TSR 20 US$1430/mt CIF China, up US$50

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, up IDR 1400
• Helixtap assessed Thai raw material THB 41/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1055/mt FOB Bangkok Laem Chabang, up US$45

A slight slowdown in the uptick in the spot prices brought some buyers back into the market during the Asian trade day. Meanwhile, raw material prices firmed up during the week on unseasonal rains in Thailand and wintering in parts of Indonesia. 

Active Chinese kept the market sentiment upbeat

Post the influx of funds into the market late last week, the spot rubber prices have significantly recovered across the board. While the market sources noted that Chinese buying is still active, it has mostly been traders. The Chinese tire makers were relatively slow during the week, waiting for the prices to steady. 

The heightened interest from China was not only restricted to African rubber, but according to Helixtap market intelligence, there was also interest in Thai and Vietnamese rubber. Offers for SVR 10 into China were reported at around US$1330/mt on CIF basis, while for STR mixture were around US$1450-US$1470/mt, on CIF basis. 

Meanwhile, there were ample offers for African rubber in the Chinese market, with offer levels ranging from US$1270-US$1305/mt on CIF. Thus, it is evident that there is ample supply in the market, and any shift in demand from the current situation would lead to a steep correction in the prices. 

However, the prices have found a new support level at around US$1300/mt mark, which the producers would like to hold on to, given the uptick in the raw material prices. In addition, the buyers are also accepting the elevated spot levels, resulting in increased market activities. 

Some producer sources noted that they are seeing some improvement in margins with the better prices. There was also some interest from the major tire makers during the day. However, unlike other regions, Indonesian prices saw some correction as some producers were willing to lower offers to move volume. Thus, the traded level dropped to US$1410-US$1425/mt on FOB basis from US$1430/mt earlier this week. 

Nevertheless, there is still some optimism in the market, but the apprehension of the optimism continuing in the next week is also predominant. 

Rising raw material prices

In line with the processed rubber market sentiment, raw material prices also saw northbound movement during the week. With wintering in parts of Indonesia, Indonesian cup lump prices rose by more than IDR 1000/kg. Helixtap Indonesian farmgate cup lump prices increased by around 2% in September.  

The situation was similar in Thailand as well. With rains in southern Thailand, the production is still low. “It is still raining in the South of Thailand; hence, the supply is limited, and field latex prices have gone up to THB 47-48/kg level,” said a producer source.

Physical prices piggybacks on optimism in China but losing steam

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1350/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1365/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1295/mt CFR Hamburg Rotterdam, up US$15
• Helixtap implied AFR10 US$1255/mt FOB Abidjan, up US$15

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1320/mt FOB Ho chi minh, up US$20
• Helixtap assessed SMR20 US$1350/mt FOB Klang Penang, up US$10
• Helixtap assessed TSR 20 US$1380/mt CIF China, up US$70

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 18,300/kg ex-works, up IDR 500
• Helixtap assessed Thai raw material THB 39.75/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1010/mt FOB Bangkok Laem Chabang, up US$15

The physical rubber market saw much-needed optimism during the week, primarily driven by the optimism in China. Meanwhile, the overall demand is yet to pick up, which will likely cap a strong rebound in the market. 

African rubber saw maximum support

Being the most economical option for China, African rubber over the week witnessed maximum support compared to other sources. According to Helixtap market sources, “China market hot.” There has been some increase in inquiries from Chinese buyers. 

The uptick has been a culmination of several factors. Lower prices are one of the main reasons for the increased inflow of African rubber into China in 2023. The spread between the AFR 10 vs. STR 20 and SIR 20 is still wide, with levels similar to December 2021. The average gap between STR 20 and AFR 10 for August is around US$133/mt, and the gap between SIR 20 and AFR 10 is around US$131/mt.

In addition, another major factor impacted the Chinese government's efforts to inject liquidity into the market even though there is still contraction as per the official Purchasing Managers' index (PMI).

However, market participants noted some new orders that could indicate improvement. The factory activities continued to shrink in August, maintaining the pressure on the Chinese government to continue supporting the economy. The traded level for AFR 10 this week was in the range of US$1230-US$1250/mt on a CIF basis. However, some market sources say that Chinese buyers are not chasing physical cargo yet. 

Indian demand is not strong enough 

Meanwhile, African rubber has also been moving into India and at a slightly better price than China. There have been trades into India this week, but the volume has been much smaller. India is still a very small buyer in the rubber market, accounting for around 5% of the market. 

A trader source noted that there has been some dip in Indian buying this year compared to last year. According to Helixtap analytics, India usually bought 60,000 mt per month, which has dropped to around 40,000 mt per month in 2023. 

Thai market finds support from raw mat and Chinese interest 

The Thai market continued its upward trend with support from Chinese buying interest and an uptick in raw material prices. With aggressive Chinese buying, STR 20 mixture prices saw a reasonable rise this week, with trades ranging from US$1360US$1410/mt on a CIF basis. 

"It (uptick in the Chinese buying) was encouraging but seems to be losing steam," said a producer source. There has also been interest in latex, but the producer sources noted that the volume has slowed comparatively. 

Meanwhile, rains continued in Thailand, keeping the tapping activities slow. As a result, their raw material prices continued their northbound movement. "Weather forecast is rain for a few more days, but you can never be certain these days," the producer source added. 

Indonesian rubber volatile 

The Indonesian rubber market also found some support due to the overall optimism in the market. However, with the international market still downcast, price volatility continued. Even though there has been some pick-up in demand, mainly from some significant tire makers, there is doubt about the sustainability of the optimism in the market.

In addition, there has been some uptick in the Indonesian imports of African raw materials lately, which might allow some producers to lower their offers to compete with African rubber.

Support for spot unlikely to last; LTC negotiations look challenging  

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1345/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1350/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1255/mt CFR Hamburg Rotterdam, up US$25
• Helixtap implied AFR10 US$1215/mt FOB Abidjan, up US$25

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1300/mt FOB Ho chi minh, up US$45
• Helixtap assessed SMR20 US$1340/mt FOB Klang Penang, up US$40
• Helixtap assessed TSR 20 US$1310/mt CIF China, down US$10

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 17,800/kg ex-works, down IDR 200
• Helixtap assessed Thai raw material THB 38.5/kg ex-works, up THB 1
• Helixtap assessed Bulk latex US$995/mt FOB Bangkok Laem Chabang, up US$70

The physical market found some technical support this week, despite the demand seeing not much improvement. However, the producers and traders noted that there is little interest in long-term contracts. 

With the existing price volatility, the traders do not seem too keen on any volume on term contracts. In addition, with the European deforestation law in the implementation process, there is a lot of talk and confusion around the premiums. 

While the market sources noted that there are lots of talks around certifications and compliance at the moment, a substantial move has yet to be made. Such confusion was expected for the term contract this year. However, given the bearish global economic outlook, the producers would struggle during this year's negotiations.

Even though auto sales have seen slight optimism lately, most of the tire makers seem to be well stocked and prefer booking as per requirement from the spot. Moreover, the downcast spot prices make it more economical to buy on the spot. 

With China on mute mode for nearly half a year, the market has ample supply, which is topped by rising production and higher yield from Africa. According to Helixtap market intelligence, African rubber would supersede Indonesian production eventually. 

With some tire makers willing to look into alternative sources to reign in the cost, the premium that Indonesian rubber enjoys is diminishing in terms of prices and preferred sources. 

SIR 20 prices peaked this year at the end of January and, since then, have seen a correction of around 9%. The correction in AFR 10 was the highest to the tune of 14%, and for STR 20, around 11% over the same period. Such a price movement underscores SIR 20 losing its competitive edge in the market.   

Moreover, with more than a year into negative margins, there has been ample permanent/temporary shutdowns of factories in Indonesia. Some of the Helixtap market sources noted that around 45 factories have shut down in Indonesia recently.  

The margin pressure is also weighing on the Thai producers, who have been struggling the most due to limited Chinese buying interest and increased competition from Africa. Meanwhile, recently, there have been reports of rains which has impacted Thai production, lending some support to both cup lump and latex prices. Producers attributed the uptick to the rain and also higher future markets.

Glut weighs on African rubber; Indo and Thai stayed strong 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1427.5/mt FOB Belawan Surabaya, up US$17.5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$25
• Helixtap assessed AFR10 US$1360/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, down US$10

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1380/mt FOB Ho chi minh, down US$20
• Helixtap assessed SMR20 US$1420/mt FOB Klang Penang, down US$30
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.5/kg ex-works, down THB 0.25
• Helixtap assessed Bulk latex US$1070/mt FOB Bangkok Laem Chabang, down US$5

The spot was mixed during the Asian trade day as the oversupply of African rubber weighed on the prices. Meanwhile, Thai and Indonesian rubber found some support from more robust raw material prices. The demand, meanwhile, was largely downcast. 

Indonesian and Thai rubber found support from raw materials 

While the demand was essentially unchanged, both Indonesian and Thai rubber prices found some support on account of some strength in the raw material prices owing to some slowdown in the tapping activities. 

“It is very quiet today. Due to the rainy weather, raw material supply is also very low. Most sellers are sidelining today,” said a Thai producer source. The STR 20 offers level has been strong over the week despite the tepid demand. 

There was unwillingness amid the Thai producers to lower their offers amid some appreciation in Thai Baht against the US dollar over the week. The producers were, however, struggling with limited interest and lower demand. 

Meanwhile, offers in China were also largely stable. According to Helixtap market sources, the producers feel that there is ample demand in China, so “someone or the other would be willing to buy”.

On the other hand, Indonesian rubber has been seeing some regular interest owing to being one of the economical options in Asia. The traded level for SIR 20 was reported in the range of US$1425- US$1435mt on FOB basis, almost US$10-US$20/mt higher than the previous day. 

As per Helixtap farmgate cup lump prices, there has been an uptick in the Indonesian raw material, possibly owing to ongoing wintering in part of the country. Thus, increased interest, coupled with strength in the raw material, let SIR 20 close the week on high. 

Africa struggling 

Meanwhile, African rubber struggled to find a market amid ample supply. Various market sources noted that they were struggling to reach US$1300/mt on FOB basis for AFR 10. “The physical market is very far from paper,” said a trader source. 

There is hardly any interest in African rubber as the major markets – China, Europe, and the US are struggling with various economic issues. There were offers into Europe as low as US$1295/mt on a CIF basis, indicating some distress amid some sellers.

More downside for spot; confusion around LTC negotiation on EUDR premium 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1370/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1330/mt FOB Abidjan, down US$10

The market activities remain muted with caution amid the continued absence of buyers weighing on the physical prices. The overall sentiment remained bearish, even though China and the US opted to keep interest rates unchanged. 

With already bearish demand, downcast macro indicators do not support the market sentiment.  

The US Federal Reserve held interest rates steady and continued to hold on to the hawkish monetary policy stance in an attempt to lower inflationary pressure.

In addition, Chinese regulators have started to probe some funds and brokerages, which could impact the market sentiment further. 

All these factors have resulted in some stagnation in the spot rubber market, pulling the prices down. The traded level for SIR 20 was reported in the range of US$1405- US$1415mt on FOB basis. 

The offer level for SVR 10 during the day was around US$1410/mt on FOB basis. However, it failed to attract much buying interest given SIR is at similar levels and below. 

Row over EUDR premium for LTC 2024

Meanwhile, the producers seemed busy trying to map the actual value of the "EUDR premium" for the upcoming long-term contract negotiations. While there is a vast range of numbers making rounds, as per the Helixtap ESG guide on a fixed price basis, the EUDR premium could be around US$65-US$85/mt and above. However, the premium level could be 5-6% and above on the percentage term. Some market sources feel the EUDR premium can go as high as US$200/mt and above. 

The interesting fact is that some companies are willing to offer solutions. However, a segment of producers might opt to do the mapping independently. The market's primary confusion is the traceability levels required to fit into EUDR-approved sources. 

Several producers are struggling to deal with the situation's complexity, and the industry unanimously agrees that attaining the traceability level expected by the European Commission would require both time and investment. 

According to industry sources, Thailand producers are gearing up for EUDR and possibly might be better placed than the Indonesian producers. This might lead to some shift in booking for LTC. However, the negotiations are likely to start from October, and as the market moves closer to the date, there might be more clarity.

Stagnation in the spot, buyers continued to wait 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1455/mt FOB Bangkok Laem Chabang, down US$5
• Helixtap assessed AFR10 US$1380/mt CFR Hamburg Rotterdam, down US$10
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, down US$10

There was some stagnation in the spot rubber market amid continued silence amid the buyers weighing on the physical prices during the Asian trade day. The producers were keener to adjust prices lower, resulting in a correction in prices.

Producers more amiable 

As the spill-over optimism from the Chinese fund inflow fades, the producers seemed more willing to adjust their offers to match the buying expectation. However, Vietnamese and Thai rubber continued to be on the higher end of the band. 

Indonesia seemed to have gained some market interest lately, it being the most economical option in Asia. As a result, a correction in SIR 20 prices was capped. The traded level for SIR 20 was reported in the range of US$1415- US$1425mt on FOB basis, the same as the previous day. 

However, there are some corrections in Vietnamese rubber, bringing it to par with the Indonesian level, which usually is at a discount on the SIR 20 price. The offer level for SVR 10 during the day was around US$1420/mt on FOB basis. This came as a surprise for some of the Indonesian producers who noted the situation as a “crazy turn around”.

Meanwhile, the problem of plenty continued owing to ample offers from Africa. Amid the expectation of a hawkish stance of the European central banks, the demand is sluggish. “Europe is very quiet for us. China has more potential buyers, but prices are not interesting,” said a producer source. There was a wide offer range for AFR 10, which hovered between US$1270-US$1350/mt on FOB basis. 

“There are not many movements today. It is quiet. Many are still on the wait and see (mode), and offers were more or less the same as yesterday,” added a trader source. 

The flurry of rate decisions could impact buying

China kept its lending rates unchanged, which aligned with the market expectations. As a result, there was not much impact on the physical price sentiment. However, it did help the market to arrest the drop in prices. As the Chinese economy is showing signs of stabilization amid a weakening yuan, some market participants are hopeful that there might be increased buying interest from China. However, the wide offer gap and ample inventory level limited the number of deals concluded.

Meanwhile, the market is still waiting for the Fed’s decision on interest rates, which some expect could be hawkish. The possibility of more hikes remains with the US serious about getting inflation back to 2%. The impact of rising interest rates is visible in slowing demand in the US, and the situation is similar in Europe. 

Whenever there has been a rate hike, the rubber prices have taken a hit, causing some distress in the market.

Buyers’ skpeticism widens bid-offer gap; SIR 20 gaining interest 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, steady
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, steady

The push and pull in the physical rubber market continued during the day as the apprehension of the buyers over a volatile spot market deterred market activity. Meanwhile, the producers were unwilling to lower their offers, barring Indonesian producers, bringing SIR 20 back into the competition. 

Producers held on to offers, barring Indonesian producers 

There was some downward pressure on the spot market amid strengthening US dollars and the volatility in the physical rubber market. While producers from most regions opted to hold on to their offers, Indonesian producers were willing to adjust to the buyer's level. 

A Singapore-based source noted that the demand is not that good in the market today, and just a few regular buyers were active. The traded level for SIR 20 was reported in the range of US$1415- US$1425mt on FOB basis, keeping the market stable on average.

However, there seems to be some willingness to adjust the prices among the Indonesian producers. This would put them in a more competitive position in the current scenario. A buyer source noted that SIR 20 is the "cheapest grade at the moment for premium."

Meanwhile, Thai producers held on to their offers, with some offers at around US$1480/mt on FOB basis. There has been some rise in Thai cup lump prices lately, which limits the scope for the producers to adjust prices. However, the weakness in Thai bhat against the US dollar does help them to cover some of the gap. 

Vietnam offers at par with Indo

Even the Vietnamese producers were seen holding on to their offers at around US$1430/mt on FOB, the same level as SIR 20. Some sources noted that rains in part of Vietnam and the spillover reaction of the recent inflow of liquidity in the Chinese market support the prices. 

However, the buying interest continued to be limited. "Prices seem to be hovering at the moment, waiting for each side to push or pull," a producer source noted. 

China is still the best bet for African rubber 

Amid a slow-moving Europe ahead of the interest rate decisions by some of the major central banks, the African rubber continued to make its way into China, with a traded level of around US$1295/mt on a CIF basis. 

However, the offers in Europe held steady, with market participants anticipating some more interest later in the week. 

A predominant stance of wait-and-see

While the supportive policy tone in China has improved the sentiment, there is still a lot to cover for the demand to return to its pre-COVID levels. Most buyers have taken a wait-and-see approach rather than book volumes on the physical market.

Spot prices ease but correction capped on expectation of China’s revival 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, down US$20

The optimism in the physical rubber market faded during the day, with buyers primarily sidelined. However, the pace of the correction was relatively slow owing to the expectation of revival in the Chinese economy coupled with unwilling producers to adjust price levels. 

Some positive growth in the Chinese economy capped the correction 

Back-to-back monetary support from the Chinese government has sparked some hope among the market participants for a revival in Chinese demand. “I don’t think we’ll see a new low anymore. China seems to be well supported now,” said a Singapore-based source. 

In addition, better-than-expected Chinese factory output and retail sales added to the optimism. As a result, some sellers were unwilling to lower their offers as the AFR 10 was offered at US$1350/mt on CIF basis, which was the traded level at the end of last week. 

However, the sustainability of the optimism is still under question, given the overall demand is still sluggish. There is a lot of apprehension among the buyers, keeping them away from the market, Helixtap market sources noted. 

This kept the market activities muted during the day, weighing on the pricing sentiment. Prices across the board saw a correction but were relatively less steep. The traded level for SIR 20 was reported at around US$1420/mt on FOB basis. 

A producer source noted that there is not much demand, but the drop in the market is “Not too bad,” given the continued overall bearishness. 

Raw material prices up

Interestingly, both Thai and Indonesian raw material prices saw some uptick. Helixtap farmgate prices for Indonesian cup lump rose around 2% compared to the September 11, 2023 level. Despite tepid demand, the prices saw some support due to wintering in parts of Indonesia. Thailand cup lump prices also saw some rise supported by bad weather and rains. 

The uptick in raw material amid sliding processed rubber prices would dent the producers’ margins. However, some strength in the US dollar is likely to nullify the impact partially. 

All eyes on monetary decisions 

The key factor that has kept the market participants on a watch is a series of central bank meetings in Europe, the US, and Japan, one of the major rubber-consuming markets. Any hikes in the interest rates have always impacted both the prices and buying interest. 

While the market expects the Fed to keep the interest rates unchanged, with the rising oil prices, the inflationary pressure is also rising. On the other hand, the ECB is expected to hike its rates, which would impact the buying sentiment of an already slowing Europe. In addition, the Bank of Japan could also start tightening its monetary policies.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Quiet market fails to cap northbound physical prices

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, down US$5
• Helixtap assessed STR20 US$1470/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1410/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1370/mt FOB Abidjan, up US$20

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1400/mt FOB Ho chi minh, up US$10
• Helixtap assessed SMR20 US$1450/mt FOB Klang Penang, up US$20
• Helixtap assessed TSR 20 US$1430/mt CIF China, steady

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, steady
• Helixtap assessed Thai raw material THB 42.75/kg ex-works, up THB 1.75
• Helixtap assessed Bulk latex US$1075/mt FOB Bangkok Laem Chabang, up US$20

The absence of active buying during the Asian trade day failed to cap the optimism in the physical market despite ample offers. Backed by the optimism of more funds entering the Chinese market and an uptick in the futures, the prices across the board increased.

Volatility in the market 

"Prices between SICOM and physical are going haywire," said a trader source. The week witnessed a lot of volatility in the price. However, the overall bias was upward. There was apprehension among the buyers, which resulted in a wide bid and offer gap, especially for Thai rubber. 

According to market sources, the day's prices increased by around US$10/mt. Some of the buyer sources noted the offers from the producers are still on a higher level. However, given the oversupply, the traded levels are much lower than the offered level. 

Moreover, over the week, the rally in the futures market was more robust than the physical market. While producers tend to follow the futures, the buyers are unwilling, considering that the outlook is yet to see real promise. 

The traded level for SIR 20 during the day was around US$1430/mt on FOB basis, while the offers were around US$1440/mt on FOB basis. "Buyers are holding out in the hope that prices will come down. It's a case of who blinks first," said another trader source. 

Meanwhile, some traders were heard selling Indonesian rubber into China (INE), trying to book profits as long as the prices increased. This, however, would add to the glut, pushing the Chinese buyers away from the physical market.  

On the raw material front, there was some upward bias in the Indonesian raw material prices owing to wintering in parts of Indonesia. 

Thailand and Vietnam find support from raw material 

Owing to bad weather in Thailand and Vietnam, the tapping activities are impacted. Some producer sources noted that the raw material supply is limited, limiting any scope to lower the prices. "I feel prices may stay supported unless better weather comes through," said a Thailand-based source. 

Another Thailand-based producer source echoing similar views noted that prices have increased compared to last week with some support from limited supply. However, he added that the buying interest is still bearish. 

Helixtap STR 20 prices rose more than 7% in the initial fortnight. The offers during the day were around US$1480-US$1490/mt on FOB basis. However, there was a wide range for STR mixture offers in China, hovering between US$1440-US$1470/mt on CIF basis, with limited buying interest. 

This creates a disconnect amid the prices, which, in the future, would lead to a steep correction unless demand catches up. 

In Vietnam, SVR 10 offers increased by around US$40/mt over the week. Helixtap SVR 10 prices rose more than 6% in the initial fortnight. 

No impact of a glut on African prices

A Helixtap market source noted that "the prices are going in all directions," with a huge range of offers on the market from as low as US$1290/mt to US$1400/mt on FOB basis. Interestingly, despite ample African offers in the market, the traded level into China increased, with trades reported at around US$1350/mt on CIF basis during the week. 

Better-than-expected Chinese retail sales and industrial output for August supported the central bank's decision to cut banks' reserve ratio requirements for a second time this year. This was one of the critical reasons which kept the market sentiments buoyant.

Glut in spot market weigh on trade level; Producers unhappy 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$15
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, up US$12.5
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, up US$12.5

Glut in the physical market dampened the market sentiments, weighing on the traded levels. Meanwhile, some producers continued to raise the prices across the board in line with the uptick in futures.

Apprehension in buyers and glut weigh on the trade level

While the spot prices rallied during the Asian trade day, trades were limited or much lower than the offers. According to Helixtap market sources, SIR 20 traded at around US$1420-US$1425/mt on FOB basis. 

"The market is still looking slow… I am sensing hesitancy among the buyers today," said a Singapore-based trader. With the higher US inflation rate than expected, coupled with the anticipation around the rate decision by the ECB, there is a lot of skepticism among the buyers. There was a slowdown in Chinese buying as well during the day.

"Buying is hand to mouth for the most part. I think buyers still believe that prices could drop back to previous levels albeit gradually," said a Thailand-based source. As a result, the trading activities were slow during the day, keeping the market in more or less mute mode.

In addition, the glut situation in the physical market owing to ample offers from Africa added to the pressure on the prices. "We do know there is plenty of African TSR 10 available everywhere," said a producer source.

Some producers unwilling to nudge 

 However, the producers were unwilling to give in to the bearishness on the buy side and raised their offer level backed by the optimism in the futures market. According to Helixtap producers' sources, no one will be willing to sell at a discount, especially amid rising raw material prices. 

Offers for SIR 20 were around US$1460/mt on FOB basis. The uptick was also seen in the Vietnamese rubber, with offers around US$1440/mt on FOB basis. 

Interestingly, despite ample offers and slow buying from its major market, African rubber offers were northbound. Offers into Europe were around US$1400-US$1410/mt on CIF basis, and to China around US$1320/mt on CIF basis. 

Market confidence low 

The Japanese are struggling with low confidence on worries that a slowdown in China's economy could have a severe impact on global and domestic growth.

Meanwhile, the European Commission would investigate subsidies provided by China to electric car makers like BYD. China mentioned that this would impact the country's relations with Europe. Such a tiff could be detrimental to the rubber market as it has been banking big on the rise of EV vehicles amid a slowdown in global demand.

Spot prices downcast; apprehension amid buyers around US inflation 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1440/mt FOB Bangkok Laem Chabang, down US$10
• Helixtap assessed AFR10 US$1377.5/mt CFR Hamburg Rotterdam, down US$12.5
• Helixtap implied AFR10 US$1337.5/mt FOB Abidjan, down US$12.5

The spot market slowed down as the buyers continued to stay out of the market during the Asian trade day. Further adding to the pressure is the upcoming US inflation data, which has resulted in some skepticism among buyers. Meanwhile, the producers tried to adjust the offers, but the correction was minimal. 

Asian Spot corrected but not a steep drop

The physical rubber prices slid during the day, but the drop was marginal for the Asian rubber. While the traded level for SIR 20 hovered in the range of US$1415-US$1425/mt on FOB basis, STR offers dropped by around US$10/mt. The demand was primarily muted, with some buying from the buyers filling in the immediate requirement. Meanwhile, most tire makers opted to stay on the sidelines, waiting for more stability in the market. 

A Singapore-based source noted that the market is still very quiet, and he does not expect the activities to pick up at least this week. 

The Vietnam rubber prices were also holding up with offers around US$1400/mt on FOB basis despite some slowdown in Chinese buying. "The prices are holding up for now it is, but the sellers would be willing to lower the offer for a serious interest," said a trader source. 

African rubber under pressure 

However, the African offers saw a sharp correction amid muted demand from China, Europe, and Africa. The African offers are "quite cheap" compared to other sources, Helixtap sources said. With some slowdown in the buying from China during the day and ample supplies in the market, the producers lowered their offers to attract buying. 

Meanwhile, rising inflationary pressures on the US and the expectation of more monetary tightening in Europe have limited the buying interest for the tire makers from the region. Germany, one of Europe's major automakers, has seen a drop in overall factory orders in August. This further underscores the bearishness in the European economy, a key market for African rubber. 

Mix macro news adds to the apprehension 

While the market participants await the US Consumer Price Index (CPI) report due today, there is an expectation of some uptick in headline inflation largely driven by elevated oil prices. This might result in the Fed further tightening the market liquidity, which would be detrimental to the overall demand. 

On the other hand, China's central bank has assured fiscal and industrial policies to boost demand and support the economy. China has lately out a series of measures to pump liquidity into the market. While it boosted the market due to tepid demand, the uptick was unsustainable.

African offers add on to the glut weighing on spot; Chinese buyers opt for domestic options

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1415/mt FOB Belawan Surabaya, down US$25
• Helixtap assessed STR20 US$1455/mt FOB Bangkok Laem Chabang, down US$25
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, down US$20

Ample offers for African rubber and some desperation amid some producers weighed on the physical market during the Asian trade day, while buyers opted to sideline and China shifted to warehouse cargoes. 

Volatility back in the physical market owing to no fundamental support

Some of the major tire makers opted to stay away from buying amid the global monetary tightening. The market participants await clarity on the stance of the Fed, ECB, and Bank of Japan. With the market confidence waning amid a lack of actual demand, the producers tried to adjust their offers but failed to attract any buying interest. 

According to Helixtap market sources, the buyers with limited spot booking are the ones buying in the physical market at the moment. Otherwise, the major tire makers are moving slowly with the liquidity crunch owing to rate hikes in the Western market. 

The market lacks actual demand, while there are ample offers, especially from Africa. 

African rubber adding to the glut 

Over the past couple of months, since Africa has been out of wintering, the physical rubber market has been under pressure owing to the increased outflow of cargoes from Africa. There is a wide range of offers in the market ranging from US$1270-US$1370/mt on FOB basis.

According to trader sources, they are struggling to sell into China. “There is still demand in China, but the bid level is too low, and there are hardly any deals in the market. It seems supply is more than demand,” said a Singapore-based trader. He added the buying interest from AFR 10 is around US$1280-US$1310/mt on CIF basis. 

China is more interested in warehouse cargoes 

While the Chinese physical buying has slowed this week, the uptick in the SHFE is leading the physical market to hold on to the optimism. A China-based source noted that the Chinese market is quiet this week. The Chinese buyers have very low confidence in the physical market now, and with ample cargo available domestically, they are opting to buy from the warehouse.

The STR 20 mixture offered domestically is around US$1450-US$1470/mt, which is almost at par with FOB level of STR 20, denting its chance to move into the Chinese market. Another Singapore-based trader noted that the discounts are widening, and the current market volatility is worsening the situation.

Macro factors to impact sentiment

The market, meanwhile, is waiting for US CPI data and the ECB’s decision on rate hikes. With the US data bringing more clarity on FED’s stance on its monetary policies, the market expects the ECB to keep rates steady.

Strong start for spot market; apprehension looms large too 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1440/mt FOB Belawan Surabaya, up US$20
• Helixtap assessed STR20 US$1475/mt FOB Bangkok Laem Chabang, up US$15
• Helixtap assessed AFR10 US$1410/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1370/mt FOB Abidjan, up US$20

The spot rubber market had a strong start despite buyers being cautious despite some weakening in the US dollar. However, there was some nervousness in the market around the sustainability of the prices as there were lower offers making rounds in the market. 

Apprehension looms large 

There was strength in the spot market, which was partially driven by the futures and partially driven by the carry-over optimism of the funds entering into the Chinese market in the last week of August. 

The traded level for SIR 20 was reported at US$1440/mt on FOB basis, which is significantly higher than the traded level at last week's close. Thus, it is clear that there is some demand. However, buying is largely triggered by immediate requirements. 

"The buyers are holding back, but only essential purchases are taking place. I didn't hear of any deals concluded today," said a trader source. The market activities were slightly slow during the day. 

Helixtap market sources noted that the market was slow due to the uptick in the spot rubber prices and other macro factors despite the weakening of the US dollar. 

The uptick was seen in the African rubber prices, too. However, the Chinese rubber factories, apparently, are holding back and are not too keen on making immediate buying. "The China market is observing. There is no actual trade in the market today," said a Singapore-based source. 

Meanwhile, there are ample offers in the market, which will likely weigh on the market sentiment as the market confidence is still low. The financial conditions continued to tighten globally, and the market awaits some Chinese economic data throughout the week. As a result, the buying is likely to remain tepid.

The upcoming ECB rates decision, with expectations of another round of hikes and the rally in crude oil prices, would further impact the buying sentiment. In addition, the market expects the US core consumer price index to rise in August, which might bring the Fed hikes back, further tightening the liquidity in the market.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Slight slowdown in spot prices brought buyers back 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1420/mt FOB Belawan Surabaya, down US$15
• Helixtap assessed STR20 US$1460/mt FOB Bangkok Laem Chabang, up US$10
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, steady
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, steady

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1390/mt FOB Ho chi minh, up US$70
• Helixtap assessed SMR20 US$1430/mt FOB Klang Penang, up US$80
• Helixtap assessed TSR 20 US$1430/mt CIF China, up US$50

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 19,700/kg ex-works, up IDR 1400
• Helixtap assessed Thai raw material THB 41/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1055/mt FOB Bangkok Laem Chabang, up US$45

A slight slowdown in the uptick in the spot prices brought some buyers back into the market during the Asian trade day. Meanwhile, raw material prices firmed up during the week on unseasonal rains in Thailand and wintering in parts of Indonesia. 

Active Chinese kept the market sentiment upbeat

Post the influx of funds into the market late last week, the spot rubber prices have significantly recovered across the board. While the market sources noted that Chinese buying is still active, it has mostly been traders. The Chinese tire makers were relatively slow during the week, waiting for the prices to steady. 

The heightened interest from China was not only restricted to African rubber, but according to Helixtap market intelligence, there was also interest in Thai and Vietnamese rubber. Offers for SVR 10 into China were reported at around US$1330/mt on CIF basis, while for STR mixture were around US$1450-US$1470/mt, on CIF basis. 

Meanwhile, there were ample offers for African rubber in the Chinese market, with offer levels ranging from US$1270-US$1305/mt on CIF. Thus, it is evident that there is ample supply in the market, and any shift in demand from the current situation would lead to a steep correction in the prices. 

However, the prices have found a new support level at around US$1300/mt mark, which the producers would like to hold on to, given the uptick in the raw material prices. In addition, the buyers are also accepting the elevated spot levels, resulting in increased market activities. 

Some producer sources noted that they are seeing some improvement in margins with the better prices. There was also some interest from the major tire makers during the day. However, unlike other regions, Indonesian prices saw some correction as some producers were willing to lower offers to move volume. Thus, the traded level dropped to US$1410-US$1425/mt on FOB basis from US$1430/mt earlier this week. 

Nevertheless, there is still some optimism in the market, but the apprehension of the optimism continuing in the next week is also predominant. 

Rising raw material prices

In line with the processed rubber market sentiment, raw material prices also saw northbound movement during the week. With wintering in parts of Indonesia, Indonesian cup lump prices rose by more than IDR 1000/kg. Helixtap Indonesian farmgate cup lump prices increased by around 2% in September.  

The situation was similar in Thailand as well. With rains in southern Thailand, the production is still low. “It is still raining in the South of Thailand; hence, the supply is limited, and field latex prices have gone up to THB 47-48/kg level,” said a producer source.

Spot market stays strong despite China slowing down 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1435/mt FOB Belawan Surabaya, up US$5
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$5
• Helixtap assessed AFR10 US$1390/mt CFR Hamburg Rotterdam, up US$20
• Helixtap implied AFR10 US$1350/mt FOB Abidjan, up US$20

The physical market continued to rally north during the Asina trade day despite some slowdown in China's sentiment, while a stronger US dollar dented the buying capacity. 

While the producers and sellers continued to ramp up their prices to match the future market rise, the buyers remained apprehensive. "I think physical prices are up but can't go up as fast as in the future," said a Singapore-based source.

Meanwhile, some trades were reported for SIR 20 hovering in the wide range of US$1425-US$1440/mt on FOB basis. 

The situation was the same for Thailand as well, wherein higher trade levels were reported.

Some of the buyers are unwilling to bid at higher levels. However, some larger Indonesian producers are also accepting the lower bids, which is widening the traded level for Indonesian rubber.

While the sentiments remained mixed during the day, Helixtap market sources noted that the market is mostly up but unrelated to rubber as the demand is still inadequate. Meanwhile, an Indonesian producer pointed out that the off-take is slow, which is confusing the market even more. 

There was some improvement in the market activities as some buyers tried to accept the elevated physical levels. Still, the fact that the current rebound is artificial and not triggered by actual market sentiment capped the uptick. 

African producers, too, noted that the prices have firmed up and continue to do so, but the buyers, especially from China, are slowly stepping back. A producer source noted that there are offers for AFR 10 at around US$1270/mt on CIF basis, but wondered if any buyers would be interested in these levels.

 "The physical prices totally gave way today in the Chinese market as China physical prices are lower than the futures," said a trader source. 

Eyes on US inflation level

Signs of continued inflationary pressures in the US have heightened the tension amid the market of higher interest rates to sustain for longer. Meanwhile, a stronger US dollar dented into the buying capacity, even though it does bring in some pause for the producers who can book slightly better margins based on the forex difference. 

"Today, the driving factor across the world is to keep inflation under control. In the case of Japan, the Yen effect is an additional factor for the consumer," said another trader source. 

Furthermore, poor Chinese economic data and the absence of a large package to stimulate the Chinese economy is also not helping to support the sentiment.

Optimism back in spot, buyers still weary 

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1430/mt FOB Belawan Surabaya, up US$40
• Helixtap assessed STR20 US$1445/mt FOB Bangkok Laem Chabang, up US$15
• Helixtap assessed AFR10 US$1370/mt CFR Hamburg Rotterdam, up US$10
• Helixtap implied AFR10 US$1330/mt FOB Abidjan, up US$10

The spot market saw a slight uptick in prices as the producers tried to latch on to the optimism in the market, even though most buyers opted to hug the sideline. Evidently, the current spike is largely sentiment-driven and unlikely to sustain until next week. 

Market participants skeptical 

There is a lot of apprehension among the market participants as they do not see any actual demand to support the strength in the physical market. A trader source noted that the market is a lot weaker than it actually seems, and there are a lot of sellers but no buyers with the rise in the prices. 

“The Chinese market does not seem good, but some traders are still buying. But we need to be more careful about the payment,” another trader source added. The market activities were muted with most of the major tire makers still sidelined. 

A Thailand-based source feels that the buyers might opt to stay out of the market this week, adding: “I suspect it (market) will remain quiet for this week.”

However, it underlines that the tire makers are possibly well-stocked, which is why there is no rush to buy at the moment. Even though the SHFE stock level saw a marginal drop last week, that is not strong enough to support the sudden price surge. 

SIR holding strong 

Despite the skepticism among the buyers, Indonesian rubber prices continued to stay strong during the Asian trade day, with the traded level reportedly at US$1430/mt on FOB basis. “I heard SIR 20 is offered at a price above US$1400/mt level,” said a Singapore-based trader, doubting if the price surge would continue. According to Helixtap farmer data, the upward bias in Indonesian farmgate cup lump post the funds entering the Chinese market also supported SIR prices.

There was slight support for the African rubber prices as well. An Africa-based source noted that the buyers are watching while the price increases. There is some interest from China with offer levels for AFR 10 around US$1290/mt on CIF basis. The sellers tried hard to carry forward the rise in the prices seen over the past few days. 

However, some sources noted that they think traders or importers would prefer to avoid buying at such levels in China. However, the overall demand or buying interest was muted, limiting the market activities. 

Macro indicators are still weak

The market confidence is faltering amid heightened concerns about global economic momentum, while the dollar firmed further, weighing in the buying capacity. 

With the Chinese decline bigger than expected, the market expects the government to be more proactive to make a difference in the demand situation. Meanwhile, German, Britain and the Eurozone manufacturing data showed declines, underscoring the overall bearishness in the market.

China optimism dissipates, spot southbound; no impact of SIAT sell off

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1390/mt FOB Belawan Surabaya, down US$20
• Helixtap assessed STR20 US$1430/mt FOB Bangkok Laem Chabang, down US$20
• Helixtap assessed AFR10 US$1360/mt CFR Hamburg Rotterdam, down US$20
• Helixtap implied AFR10 US$1320/mt FOB Abidjan, down US$20

The spot rubber market slowed as the optimism around China fizzled out during the day amid weak PMI data. With both buyers and sellers away, the market awaited some stability. Meanwhile, amid the bearishness, the news of Saroafrica acquiring 86.7% of the Siat group failed to stir any reaction. 

Apprehension weighs on over-optimism

The market participant, irrespective of buyer or seller, opted to stay on the sidelines amid the artificial uptick in the spot prices. With the fundamentals still weak, it was evident that the prices would see correction dropping back to the reasonable levels. 

According to Helixtap market sources, the market was extremely quiet today. With most of the major tire makers out of the market, the producers also seemed confused about what level to offer at the market. 

Meanwhile, the African offers saw around US$20/mt drop during the day. However, offers into China saw a less steep correction owing to some lagging effect of the funds pumped into the Chinese market. A trade for AFR 10 was reported at US$1295/mt on CIF basis. 

"I don't see any buying happening at these prices. Even the producers themselves don't believe this price jump is sustainable. Everybody is in a wait-and-watch mode," said a Thailand-based source.

Amid the confusion and skepticism in the market, weak Chinese PMI data added to the pessimism in the market. The weak demand in China weighed on the services activity, which expanded at the slowest in eight months in August, underscoring that the stimulus failed to revive consumption.

The slowdown in the services sector offset the improvement in manufacturing production and demand, keeping the Chinese economy downcast. 

SIAT's sell-off to Saroafrica had no impact on the market

Saoafrica, a Nigerian family-owned group, recently acquired 86.7% of the Belgian company Siat (Investment Company for Tropical Agriculture), specializing in producing rubber and palm oil in West Africa.

Several market sources confirmed the same and noted that it had little effect on the physical market, which is already struggling with tepid demand. 

Siat has been struggling financially, which resulted in selling the stakes, said a trader source, adding they stopped the Compagnie Hévéicole de Cavally (CHC) operation for nearly two years. Only Gabon still operates around 20,000 mt per year.

According to Helixtap market intelligence, Siat group has been dealing with financial issues since the repurchase of the shares from Halcyon. In 2017, HALCYON Agri Corporation Limited sold its stake in SIAT SA, owned by GMG Global Ltd, representing 35% of the issued and paid-up capital in SIAT SA, which was completed on Sept 29, 2017. 

A Singapore-based source noted it is a decent deal as Gabon is still "technically still less crowded" than Ivory Coast. Siat has some 40,000 hectares of oil palm plantations and some 5,500 hectares of rubber plantations. 

The transaction is expected to be finalized in the first quarter of 2024 following approval from the Nigerian competition authorities.

Chinese stimulus boosted the prices, uptick stronger than 2021

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1410/mt FOB Belawan Surabaya, up US$60
• Helixtap assessed STR20 US$1450/mt FOB Bangkok Laem Chabang, up US$85
• Helixtap assessed AFR10 US$1380/mt CFR Hamburg Rotterdam, up US$85
• Helixtap implied AFR10 US$1340/mt FOB Abidjan, up US$85

The physical rubber market rallied during the Asian trade day as the support from China kept the market sentiments buoyant even though the demand had not improved. Meanwhile, most buyers opted to hug the sidelines, awaiting price stability. 

The impact of the stimulus on rubber 

The prices continued north as the market seemed high on China stimulus optimism. Once again, the prices were largely driven by the sentiment rather than the actual demand in the market. 

Prices across the board saw a rise in the range of 6%-12%, with African rubber seeing the highest jump and Indonesian rubber finding the least support. 

"I see funds buying like crazy now. Again, artificial situation. Don't know how long this will continue," said a producer source. The lack of demand does bring skepticism in the market. However, it did not deter the producers from joining the ride with the traded level for the STR 20 mixture, seeing a steep rise to US$1430/mt on CIF basis. 

According to Helixtap market sources, even the warehouse cargoes are trading at higher prices. A trader source noted that funds entered the market on August 31, 2023, which propped up the market. 

Another trader noted that SVR 10 has been inching up, but since Vietnam is on holiday until September 5, the uptick is capped. "Between September 1 and September 4, Vietnam sellers have raised prices by $70-80/mt. Thai prices are also higher by around the same," a Thai-based trader noted. 

What did China do?

Last week, China stepped up measures to boost the downcast economy, with top banks cutting lending rates and expecting further support for Beijing, including relaxing restrictions on home purchases. This move supported the ailing Chinese property market, weighing heavily on market sentiment. 

Rally much stronger than 2021

Compared to a similar situation in 2021, the prices saw a much stronger rally this year. 

According to Helixtap data, STR 20 prices were up by 5% on a month-on-month basis in October 2021. SIR 20 was assessed as 2% higher, while AFR 10 prices rose 3% after some speculative buying from China, which has created havoc in the market with talks that fund bought more than 200,000 tons at the Shanghai Future's Exchange.

The overall sentiment, however, is the same, that the situation is unrealistic. Some producers were confused about what level to peg the offers. Most of the market sources noted that there are hardly any buyers in the market, limiting the trading activities during the day. 

Even Helixtap farmers' data showed some uptick in sentiment, with Indonesian farmgate prices significantly rising.

The summary from our predictive forecasting this week:

To see more and compare physical and futures spread, click here. Email any of our team members to understand our forecasting solution.

Physical prices piggybacks on optimism in China but losing steam

Helixtap Daily Physical Prices Assessment

• Helixtap assessed SIR20 US$1350/mt FOB Belawan Surabaya, down US$10
• Helixtap assessed STR20 US$1365/mt FOB Bangkok Laem Chabang, steady
• Helixtap assessed AFR10 US$1295/mt CFR Hamburg Rotterdam, up US$15
• Helixtap implied AFR10 US$1255/mt FOB Abidjan, up US$15

Helixtap weekly Physical Prices Assessment

• Helixtap assessed SVR10 US$1320/mt FOB Ho chi minh, up US$20
• Helixtap assessed SMR20 US$1350/mt FOB Klang Penang, up US$10
• Helixtap assessed TSR 20 US$1380/mt CIF China, up US$70

Helixtap weekly Raw Material Prices Assessment

• Helixtap assessed Indonesian raw material IDR 18,300/kg ex-works, up IDR 500
• Helixtap assessed Thai raw material THB 39.75/kg ex-works, up THB 1.25
• Helixtap assessed Bulk latex US$1010/mt FOB Bangkok Laem Chabang, up US$15

The physical rubber market saw much-needed optimism during the week, primarily driven by the optimism in China. Meanwhile, the overall demand is yet to pick up, which will likely cap a strong rebound in the market. 

African rubber saw maximum support

Being the most economical option for China, African rubber over the week witnessed maximum support compared to other sources. According to Helixtap market sources, “China market hot.” There has been some increase in inquiries from Chinese buyers. 

The uptick has been a culmination of several factors. Lower prices are one of the main reasons for the increased inflow of African rubber into China in 2023. The spread between the AFR 10 vs. STR 20 and SIR 20 is still wide, with levels similar to December 2021. The average gap between STR 20 and AFR 10 for August is around US$133/mt, and the gap between SIR 20 and AFR 10 is around US$131/mt.

In addition, another major factor impacted the Chinese government's efforts to inject liquidity into the market even though there is still contraction as per the official Purchasing Managers' index (PMI).

However, market participants noted some new orders that could indicate improvement. The factory activities continued to shrink in August, maintaining the pressure on the Chinese government to continue supporting the economy. The traded level for AFR 10 this week was in the range of US$1230-US$1250/mt on a CIF basis. However, some market sources say that Chinese buyers are not chasing physical cargo yet.