Hot Topic Focus: Rubber Prices Locked in a Tug-of-War(Oct 26)

Hot Topic Focus: Rubber Prices Locked in a Tug-of-War

Supply Side: Mixed Bullish and Bearish Factors, Divergent Pattern

From a seasonal perspective, after weather conditions improve in northeastern Thailand, tapping operations will resume smoothly, and the pace of raw material volume increase is expected to accelerate, putting further downward pressure on cup lump purchase prices. In southern producing areas, rainfall disturbances persist, tapping is hindered, and the tight supply pattern of latex continues. However, demand-side drag is significant, with downstream factories showing weak purchasing willingness and upstream factories reluctant to bid higher. Latex prices may come under synchronized pressure alongside cup lump. That said, considering the tight supply pattern in the south is unlikely to ease in the short term, downside room may be limited.

Vietnam's producing areas remain in the seasonal peak production cycle, but recurring rainfall in the southern main producing region has disrupted tapping operations, constraining effective new latex output. The tight raw material supply pattern continues, pushing up local procurement costs. If rainfall decreases subsequently, there is room for latex supply to recover, and output is expected to improve marginally. Going forward, continuous tracking of precipitation changes in producing areas and their impact on raw material supply is needed.

Hainan's producing areas have recently experienced irregular rainfall, increasing the impact on tapping operations. The peak production pace of raw materials has slowed, and new latex output has been somewhat constrained. Local processing plants' production profits and order performance remain satisfactory, with good restocking demand for raw materials. Under continued rainfall effects, they maintain a premium procurement stance for raw materials, thereby supporting latex prices at high levels. According to weather forecasts, Hainan producing areas will continue to experience rainfall disturbances next week, with temperatures dropping simultaneously.

Yunnan's producing areas experienced intermittent thunderstorms during the week, with uneven rainfall distribution across different areas, but the overall impact on tapping operations and raw material volume was limited. Raw material supply in producing areas basically maintained a normal pace. Affected by market sentiment and localized rainfall disturbances, raw material prices declined slightly, then gradually stabilized under supply-side support, showing a trend of first declining then stabilizing. The short-term price center of gravity is expected to remain stable.

Demand Side: Restocking Slows, Tire Operating Rates Fluctuate Within a Narrow Range

All-Steel Tires:

After several rounds of price hike policy stimulus, some agents and stores have nearly completed restocking, and have now entered the inventory digestion stage. The pace of new order follow-ups has slowed, and the short-term focus is primarily on digesting previously stocked inventory.

Semi-Steel Tires:

The "Double 11" online shopping festival pre-sale campaign has begun, and online promotions may continue to divert sales from offline stores. Offline distribution faces certain diversion pressure, and channel sentiment tends to be cautious. High costs and price hike expectations coexist, and tire enterprises' cost pressure has not yet eased, with some companies continuing to prepare a new round of price increases. However, from the channel side, previous restocking has been successively completed, the restocking pace has noticeably slowed, and shipment speed is mediocre. Market transactions have shifted toward inventory digestion as the main focus. Against this backdrop, tire operating rates may maintain narrow fluctuations in the short term, lacking significant volume-driven momentum.

Market Outlook

In the short term, tapping conditions in northeastern Thailand are improving, while persistent rainfall in southern Thailand continues to disrupt tapping operations, with mixed bullish and bearish factors on the supply side. On the demand side, high-priced raw materials continue to suppress downstream purchasing sentiment, with some tire enterprises' operating rate recovery limited, and procurement primarily based on rigid demand. Overall, under the tug-of-war between bullish and bearish forces, the natural rubber market is expected to maintain range-bound consolidation in the near term.

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