Supply Constraints Drove the Natural Rubber (TSR) Market Prices Higher in August 2024

Laem Chabang, Thailand: In August 2024, the Natural Rubber (TSR) market experienced bullish sentiment, driven by a combination of supply disruptions and strong demand. Adverse weather conditions in key exporting nations hampered the rubber-tapping process, reducing the availability of Latex, the raw material for Natural Rubber (TSR) production. This supply constraint coincided with rising demand from both domestic and overseas downstream automotive and tire industries, creating an imbalance that fueled upward price pressure. As the supply could not meet the growing needs of downstream sectors, the market witnessed a significant incline in Natural Rubber (TSR) prices, reinforcing bullish sentiment throughout the month.

In August 2024, the Natural Rubber (TSR) market in Thailand showcased a 2.95% price increase, reaching USD 1740/MT (FOB-Laem Chabang), driven by tight supply conditions amid widespread rains and floods in major production areas. The adverse weather in Southeast Asia disrupted the rubber-tapping process, slowing the supply of raw materials and contributing to rising Natural Rubber (TSR) prices. Despite being the peak season for rubber supply, concerns over limited availability persisted, while demand for Natural Rubber (TSR) grew in key markets such as the US, Europe, India, and China. Interestingly, the higher prices have not yet encouraged farmers to intensify harvesting or adopt yield-enhancing practices. Additionally, the market was further supported by the sharp depreciation of the US dollar against other major currencies, contributing to the overall bullish trend in the Natural Rubber (TSR) market. Therefore, these factors combined and shifted the market scenario of Natural Rubber (TSR) upwards.

Additionally, in August 2024, parts of Yunnan Province in China were affected by seasonal leaf fall disease, which further obstructed the supply of natural rubber raw materials both domestically and internationally, contributing to a slight increase in raw material prices. In China, a major importer of Natural Rubber (TSR), inventories continued a slow destocking trend. As of August 25, 2024, the total inventory of Tianjiao bonded and general trade in the Qingdao area had declined slightly to 460,100 tons, reflecting the ongoing reduction in stock levels amid constrained supply.

In China, domestic policies aimed at promoting automobile consumption have provided strong support to the downstream tire industry, which has maintained a stable and positive trend. The production of all-steel tires has rebounded compared to earlier periods, intensifying the demand for natural rubber. As of August 23, 2024, the operating load of semi-steel tires in domestic tire enterprises stood at around 79%, while in the Shandong region, the operating load for all-steel tires was approximately 58%, reflecting the steady recovery in tire production and the corresponding increased demand for natural rubber.

Currently, both domestic and international raw material supply prices for natural rubber are on the rise. Driven by consumption-promotion policies, tire production has seen a slight rebound, offering further support to the natural rubber market. In the short term, with rising costs and increasing demand, the Natural Rubber (TSR) market is expected to experience strong fluctuations, as supply constraints and heightened consumption drive market volatility.