Natural Rubber Prices Surge on the First Trading Day After the Holiday in China

February 24 news

On February 24, the Chinese natural rubber market welcomed its first trading day after the Spring Festival. The main rubber futures contract on the Shanghai Futures Exchange opened and closed higher, with the 2605 contract closing at 17,030 CNY/ton, an increase of 4.38% from the closing price of 16,315 CNY/ton on the last trading day before the holiday.

The spot market is simultaneously rebounding, with prices for Thai smoked rubber sheets and standard rubber increasing. China’s spot prices for full-cream latex are following the upward trend in futures prices. Traders are offering prices aggressively. According to monitoring data, as of February 24, the spot price of natural rubber in China stood at around 16,833 CNY per ton, up 3.38% from pre-holiday levels.

Strong performance in overseas markets and a contraction on the supply side have ignited a post-holiday rally.

On the one hand, during the extended Spring Festival holiday, Tokyo rubber futures rose cumulatively by about 3%. At the same time, prices of raw latex and cup rubber in Thailand also increased accordingly. As of February 24, the price of Thai latex had risen to 67.00 Thai baht per kilogram, up 9.84% from the pre-holiday level of 61.00 Thai baht per kilogram. On the other hand, major producing countries such as Thailand and Indonesia are gradually entering their low-production season, and localized rainfall is further reducing latex yields, resulting in year-on-year declines in raw-material output. Meanwhile, China’s Yunnan and Hainan production areas are currently in the winter tapping suspension period, leading to a gap in domestic rubber supply and creating an overall market situation characterized by tight supply.

In addition, the macro atmosphere in China is relatively warm, with a strong demand for the valuation repair of natural rubber. The resonance of sentiment between the natural rubber spot market and the futures market has driven a significant increase in the price of natural rubber.

Outlook for the future:

Natural rubber analysts believe that, given the current seasonal tightening of supply and strong support from a rebounding overseas market, natural rubber prices are likely to remain high in the short term. In the later stage, it will still be crucial to monitor the pace at which downstream tire manufacturers resume operations and the intensity of destocking in natural rubber inventories.