Supply Increased in January, Global Natural Rubber Market Faces Decline

In January 2025, the global natural rubber market showed a downward trend due to improved weather in major producing areas and improved supply. In addition, demand in China, the largest importer, declined before the Spring Festival holiday. As downstream companies reduced their activities during this period, market transactions slowed down, resulting in a gradual reduction in natural rubber inventories and a sluggish overall market performance.

In Southeast Asia, the natural rubber market fell by 2% at the beginning of 2025. This bearish market sentiment for natural rubber may be related to the sufficient demand and supply in the downstream automotive and tire industries at home and abroad. In addition, as natural rubber inventories continued to accumulate, demand for natural rubber in China, a major importer, declined in January 2025. As of January 12, the total bonded and general trade inventory of natural rubber in Qingdao was 504,300 tons, an increase of 4,200 tons from the previous period. As of January 16, the operating load of semi-steel tires of domestic tire companies in China was about 78%, a slight decrease. The construction of full-steel tires of tire companies in Shandong Province was about 60%, which also declined.

In addition, in European countries, the European Commission announced on October 2, 2024 that the implementation of the European Zero Deforestation Regulation (EUDR) would be postponed for 12 months, aiming to provide companies with more time and clarity to adjust while supporting the regulation's long-term goal of combating deforestation. This postponement eased the short-term concerns of rubber exporters. As this immediate pressure eased, the urgency of ensuring the supply of natural rubber that meets the new standards also decreased, leading to easing market concerns and falling prices. This has exacerbated the bearish trend in natural rubber prices.

In addition, there are several other factors that have led to the recent decline in natural rubber prices. First, Trump's term has heightened concerns about the resurgence of trade conflicts, especially concerns about higher tariffs on imports from China. If the policy is implemented, it may prevent Chinese buyers from purchasing rubber products, thereby weakening global demand and putting downward pressure on prices. Second, the overall decline in oil prices in the fourth quarter further suppressed natural rubber prices. Since many synthetic rubber products are made from crude oil and refined petroleum, falling oil prices have made synthetic alternatives more cost-effective, thereby reducing the demand for natural rubber. These combined economic and geopolitical impacts have reinforced the bearish trend in the natural rubber market.