Market Review

The average price of RMB-denominated natural rubber in the spot market trended down this week. During the week, external macroeconomic sentiment remained uncertain, keeping market participants cautious. From a fundamental perspective, favorable weather conditions in Yunnan’s production areas and the further expansion of tapping areas bolstered optimistic expectations for increased output. On the demand side, the foreign trade environment remained bearish, with a noticeable decline in finished product orders. Tire producers maintained only essential restocking at low prices, while some extended their May Day holiday compared to last year. With fundamentals lacking solid support, rubber prices weakened.

Market Forecast

Forecast: China’s natural rubber market may be range-bound next week. From a macroeconomic perspective, lingering uncertainties may continue to weigh on market sentiment, prompting cautious capital movement and maintaining downward pressure across commodity markets. On the fundamental side, rubber-tapping areas have expanded further both domestically and internationally, pointing to anticipated growth in new rubber production. However, the short-term output increase may remain constrained, coupled with limited shipment arrivals, so the port inventory can hardly increase notably. On the demand side, the upcoming May Day holiday is expected to dampen the market activity. The demand may fail to support the market price. It is estimated that the weekly average price of SCRWF in Shanghai may be RMB 14,500/mt, and its mainstream prices may be in the range of RMB 14,000-15,000/mt. Going forward, close attention should be paid to the progress of tapping operations in the producing areas and the changes in the external macro environment.

Macro environment: There are still many uncertainties in the external macro environment. The market’s risk appetite has cooled down. Attention should be paid to macro sentiment’s impact on commodity markets.

Tapping start: Amid favorable weather conditions in Yunnan’s production areas, the overall rubber tapping will gradually expand. Hainan’s western region may face delayed tapping time until end-April due to relatively severe powdery mildew outbreaks coupled with cold spells in later spring. Although market expectations for increased new rubber supply are growing, the output released in the initial stage will be relatively limited. In addition, China’s natural rubber imports may remain in slack season in Q2. Overall, the pressure release on the supply side is limited.