Why Is Rubber in Short Supply?
For one, supplies from traditional rubber-producing nations are showing signs of marginal contraction.
In an interview with *Jiemian News*, Tang Xiaonan, a natural rubber analyst at Jinlianchuang, pointed out that major producing nations-such as Thailand and Indonesia-are grappling with severe challenges, including the aging of rubber trees and structural adjustments in cultivation. Although output has increased in certain African nations, such as Côte d'Ivoire, these gains are merely a drop in the bucket and are insufficient to fully bridge the supply gap.
A more profound impact stems from weather conditions. Several institutions have warned that by May 2026, the central and eastern equatorial Pacific is likely to enter
an El Niño phase; consequently, weather-related factors could potentially impact upstream production levels this year.
Furthermore, on the demand side, driven by the steady advancement of infrastructure projects and the continuous expansion of automotive manufacturing capacity, the tire industry's rigid demand provides a solid floor for the market, demonstrating sustained resilience.
"In the long run, the market's price center for natural rubber is expected to continue its upward trajectory," Tang Xiaonan projected.
While the market is once again facing disruptions caused by El Niño and experiencing rising prices, the current market landscape differs significantly from that of two years ago.
Tang Xiaonan noted that, looking back at the second quarter of 2024, the primary driver behind the surge in natural rubber prices was the concentrated release of stockpiling demand triggered by the European Union Deforestation Regulation (EUDR). At that time, international markets diverted available supplies, leading to a sharp decline in China's natural rubber imports and, consequently, a tightening of spot market liquidity.
The EUDR is a mandatory regulation introduced by the European Union to curb global deforestation and promote sustainability within supply chains.
For large and medium-sized enterprises, the regulation takes effect on December 30, 2025; for small and micro-enterprises, it takes effect on June 30, 2026-with a compliance deadline extended to December 31, 2026. The regulation covers a range of commodities, including beef, cocoa, coffee, palm oil, rubber, soybeans, and timber.
"Currently, there is no actual shortage in the physical spot supply," Tang Xiaonan stated. Data indicates that as of early May, inventories of dark-colored rubber in the Qingdao region were ample, showing a substantial increase of 39% compared to the same period in 2024.
Given the absence of any actual supply shortages, how have prices still managed to breach the 18,000 yuan per ton mark?
"Behind this lies the synergistic interplay between natural rubber's own solid fundamentals and its financial attributes," explains Tang Xiaonan. "Currently, we are in the early stages of the tapping season; consequently, the supply of latex-the raw material-remains at low levels across both domestic and international production regions. Simultaneously, demand in the international market is picking up, prompting overseas processing plants to intensify their efforts to snap up raw materials, thereby driving a continuous rise in upstream prices."
Furthermore, domestic downstream tire manufacturers are actively replenishing their stocks to meet rigid demand, providing robust fundamental support for natural rubber. From a macro perspective, the domestic stock market is on the rise, and the overall macroeconomic environment is trending toward optimism.
The commodity futures market is currently exhibiting a divergent pattern. As tensions in the Middle East subside, the market for energy and chemical products has shown signs of softening; however, the El Niño climate phenomenon has fueled market expectations of tightening agricultural supplies, significantly boosting capital activity. Consequently, futures contracts for precious metals and agricultural products are demonstrating stronger upward momentum.
Since the beginning of 2026, numerous industry insiders have expressed high confidence in the trajectory of rubber prices for the year ahead, effectively propelling the entire industry chain into the spotlight. Minmetals Futures has characterized rubber as a "patient, late-cycle player in a bull market."
Looking back at the commodity bull market of 2003–2007, a typical rotation sequence was observed: "Precious Metals → Industrial Metals → Energy → Agricultural Products." Currently, precious metals and non-ferrous metals are taking center stage; in accordance with historical patterns, this upward momentum is expected to gradually ripple through to the rubber market.
"Rubber has not experienced a major price surge in many years, making it a highly elastic asset class for long positions," notes Minmetals Futures. "However, given that rubber has historically tended to behave as a late-cycle commodity, precise timing is essential when taking a position."
Yet, amidst the chorus of rising prices in the upstream sector, downstream enterprises are feeling increasingly anxious.