Natural Rubber Market Update

1. Rubber Spot Market Analysis

This week, spot rubber prices fell slightly, with macroeconomic sentiment cooling. The upward trend in rubber prices paused, and natural rubber prices began to decline slightly. Offers from holders remained active, raw materials remained high, and cost support remained. Downstream demand was mediocre, with retailers restocking on dips. In the short term, the rubber price correction may be coming to an end, and prices are expected to remain weak and consolidate.

This week, natural rubber latex spot market offers fell, with traders offering relatively active offers. Futures prices continued to decline. Upstream processors lowered their shipping prices, weakening cost support. Bearish market sentiment continued to grow, driving spot prices lower. Downstream product manufacturers, adopting a wait-and-see approach, are adopting a "don't buy on dips" mentality. Firm orders and replenishment are limited, and transactions are negotiated.

Market Forecast:

1. Rainy weather continues to disrupt production, leading to a gradual release of raw materials.
2. Operating rates at sample tire manufacturers are expected to improve in the next cycle.
3. Inventories in Qingdao, China, continue to decline.
4. Exchange rates, Federal Reserve interest rate cuts, and other factors.

2. Natural Rubber Supply Analysis

2.1. Thailand Production Areas

Weather improved across much of Thailand during the period, leading to a slow increase in supply and a significant decline in raw material prices. Border friction between Thailand and Cambodia has not been effectively resolved, hindering rubber tapping in the affected areas and encouraging active shipments from secondary dealers. Thai factories hold raw material inventories ranging from 30 days to 60-90 days, with inventory replenished gradually as production ramps up. Finished product inventories are low, maintaining normal production and long-term shipments. Some factories are actively selling EUDR rubber.

2.2. Vietnam Production Areas

Rain continued to disrupt parts of Vietnam's production areas this week, with relatively heavy rainfall in central and northern regions. However, overall output showed steady seasonal growth. Vietnamese rubber processing plants are experiencing an improvement in their finished product shipments, driving increased raw material procurement activity and supporting relatively firm raw material prices. Currently, profits and orders for concentrated rubber are relatively favorable, leading processing plants to continue to favor concentrated rubber, with 3L production primarily focused on order fulfillment. Domestic traders rotated positions during the week, and orders from the Chinese market improved slightly, but export profits to the domestic market remain relatively low. Under production pressure, some processing plants are preferring to sell to domestic and overseas markets.

2.3 Yunnan Production Area

Yunnan production areas continued to experience heavy rain and limited rubber production during the week, resulting in continued pressure on raw material supply. Competition for raw material purchases was fierce among processing plants, with relatively high profits for concentrated rubber, highlighting the advantages of raw material procurement and gradually resuming operations. Due to limited profits and significant resistance to raw material procurement, standard rubber plants have increasingly turned to sourcing raw materials from abroad for tire rubber production.

2.4. Hainan Production Area

This week, weather conditions in Hainan improved, and rubber tapping operations gradually resumed. Raw material production on the island gradually released, and overall supply showed seasonal growth. Daily rubber harvests across the island were reportedly around 4,000-4,500 tons. Futures and spot prices fell during the week, limiting processing plant profit margins. Furthermore, bearish market expectations strengthened, reducing local processing plants' willingness to replenish their inventory of high-priced raw materials. This, in turn, depressed raw rubber purchase prices and weakened cost support.

3. Natural Rubber Cost and Profit Analysis

3.1. International Production Areas: Thailand

Theoretical production profits for Thailand's STR20 rubber remain acceptable. Cup rubber prices retreated from their highs during the period, weakening factory cost support month-over-month. Domestic profit-taking cooled, and factory actual order transactions fell short of last week's levels, leading to lower quotes. However, the decline in raw material prices outpaced that in finished product prices, suggesting that STR20 rubber still has room for profit.

3.2. Domestic Production Area: Hainan

Currently, raw material output on the island is gradually recovering, and the capacity utilization rate of local processing plants has also increased. However, downstream demand for concentrated milk is weak, making it difficult to sell at high market prices. This has squeezed the profit margins of processing plants, and has dampened their enthusiasm for rubber collection and production.

4. Analysis of Natural Rubber Demand

4.1. Downstream Dry Rubber

This week, China's semi-steel tire production capacity utilization rate was 70%. China's full-steel tire production capacity utilization rate was 59%. Some semi-steel and full-steel tire companies are currently in the final stages of winding down and will gradually suspend operations in the near future. The number of companies undergoing maintenance is further dragging down the overall operating rate. At the end of the month, domestic and foreign sales will be relatively concentrated, which to some extent will benefit the reduction of finished product inventory.

4.2. Concentrated Milk Downstream

We have heard that Wenzhou foaming plants are operating at approximately 20-30% capacity. Due to the persistent high temperatures this summer, processing plant workshops have been operating at limited capacity. Furthermore, terminal orders are sluggish, and inventory turnover cycles have lengthened. Under these dual pressures, some processing plants have proactively reduced their production loads. Currently, finished product and raw material inventory levels at processing plants are generally low, with raw material inventory cycles lasting approximately 20-30 days. There is a weak appetite for spot purchases, and market participants are only interested in negotiating prices to secure essential purchases.

We have heard that glove factories in North China are operating at approximately 60% capacity. The easing of high temperatures has led to a recovery in production at some processing plants, but some factories indicate that new orders remain insufficient. The industry relies heavily on rigid demand. Recent volatility in the futures market has led to a cautious purchasing strategy for processing plants, with a strong wait-and-see attitude towards raw materials at current prices, with only replenishing inventory at low prices based on demand.

5. Natural Rubber Price Difference Chart

6. Industry News of the Week

[Zhongce Rubber Globally Debuts Dedicated Electric Commercial Vehicle Tire, Breaking the Industry's New "Three Highs Dilemma"]

The "Ahead of the Times, Leading the Future" 2025 Global Launch of Dedicated Electric Commercial Vehicle Tires was grandly held in Chengdu, China. Over a thousand industry partners, opinion leaders, and media reporters gathered to witness this landmark moment: Zhongce Rubber's global debut of its groundbreaking "X Technology System" and new dedicated electric commercial vehicle tires, for the first time overcoming the new "three highs" dilemmas of high wear, high failure rates, and high abnormal wear caused by the high torque and high load characteristics of electric commercial vehicles.

This launch not only signaled the strongest voice of the Chinese tire industry in the global new energy wave, but also marked the official launch of a new era of green transportation. At the opening of the event, Shen Jinrong, Secretary of the Party Committee, Chairman, and General Manager of Zhongce Rubber Group, took the stage to deliver a speech, sharing with the guests the opportunities presented by this major breakthrough and Zhongce Rubber's forward-looking layout and pioneering practices in the research and development of electric commercial vehicle tires.

He pointed out that Zhongce Rubber has always adhered to a long-term approach, upholding a "product-first" philosophy. Guided by its "Five Most" strategy of "the most advanced technology, the latest materials, the best equipment, the lowest energy consumption, and the most market-adaptable products," it is driving the continuous advancement of specialized commercial vehicle tire technology in China.

Mr. Shen emphasized that the new energy revolution has reshaped the automotive industry landscape, and the development of electric commercial vehicles has placed unprecedentedly stringent demands on tire performance. The unique characteristics of electric vehicles—instantaneous high torque (characteristic of electric motors) and significant weight gain (battery load increases by approximately 25%)—have frequently led traditional tires into a new dilemma of "high wear, high failure rates, and high abnormal wear," a key challenge hindering the industry's development.

As a leader and pioneer in China's tire manufacturing industry, Zhongce Rubber shoulders the natural mission of helping Chinese tires catch up with the world. Amidst the surge in new energy, Zhongce Rubber, through accurate predictions of major new energy market trends and comprehensive analysis of user demands, pioneered the establishment of a research and development team in partnership with top universities nationwide. This team has undertaken over 110 university-enterprise collaboration projects, resulting in 195 authorized patents.

By integrating and iterating over 60 years of technological assets and processes in core areas such as formulation, structure, and process, and leveraging digital R&D tools as a foundation for innovation, and building upon the comprehensive, multi-dimensional Tiangong system, Zhongce Rubber has developed a world-first, specialized electric commercial vehicle tire called the "X Technology System," encompassing "X Carbon Pole," "X Mysterious Armor," and "X Craftsmanship." This system addresses the "two major dynamic characteristics" and "new three highs dilemma" faced by electric commercial vehicle tires. 

This system thoroughly overcomes the technical barriers of electric tires and achieves six major performance breakthroughs. After over 2,000 tests and validations, Zhongce Rubber successfully transitioned this technology from concept to mass production, successfully adapting it to the models of several leading automakers and receiving market feedback that far exceeded expectations. The global launch of a tire specifically designed for electric commercial vehicles marks not only another technological leap for Zhongce Tire, but also a declaration that the Chinese tire industry stands at the forefront of the global new energy wave: Chinese brands have the ability and confidence to surpass the world's advanced technologies. 

At the launch event, Zhang Chunsheng, Director of the Zhongce Rubber Group All-Steel Technology Research Institute, delivered a detailed presentation on topics including the development of the new energy sector, the "X Technology System," and Zhongce's global debut of a tire specifically designed for electric commercial vehicles. He noted that the current penetration rate of electric commercial vehicles has reached 27% and continues to rise. Leveraging advantages in environmental protection, cost, and policy, China's commercial vehicle industry has entered the electric drive era. 

Its application scenarios are expanding from closed environments to open ones like urban distribution, gradually unleashing the potential of long-distance trunk transportation, and evolving towards intelligentization, becoming "smart terminals." However, the high torque and heavy load characteristics of electric commercial vehicles present tires with a triple challenge: high wear, high failure rates, and high abnormal wear. Abnormal wear rates reach 30%, wear reduction rates reach 30%, and the tip failure rate reaches 50%. Therefore, tires have become a core component that determines the distance, duration, and economy of electric commercial vehicles. 

As the only domestic tire company with a specialized forward-engineered technology system, Zhongce has developed the X Technology System based on the Tiangong system to address the challenging conditions faced by electric truck tires. This system includes X Carbon Pole Technology, X-Xuanjia Technology, and X-Zaoyi Technology.

X Carbon Pole Technology utilizes a world-first reinforced composite material. Through pioneering equipment, processes, and materials, it achieves a 50% improvement in wear resistance, an 80% reduction in river-like wear, a 15% improvement in handling performance, a 50% reduction in tip failure rates, and a reduction in shoulder wear. 60% and other world-leading results.

X-Xuanjia technology addresses tire bead, tire frame, and tire crown technologies to enhance bead clamping force, improve wire safety multiples, and balance crown rigidity, effectively resolving related fault and wear issues. X-Zaoyi high-pressure technology, combined with tire vulcanization pressure theory, significantly increases steam pressure, enhancing the density of the tire vulcanized rubber and improving wear resistance and heat generation.

Leveraging the "X Technology System," Zhongce Rubber has launched a new family of tires specifically designed for electric commercial vehicles, covering all commercial vehicle categories: heavy-duty trucks, light trucks, mini trucks, and buses. The heavy-duty truck family includes: EV67/EV68/EV69/EV53/EV57/EV59; the light truck family includes: EV51/EV63; the mini truck family includes: EV505/SL368; and the bus family includes: EV61/EV65/EV65 PRO.

Notably, even when used on conventional fuel vehicles, these tires significantly outperform conventional tires in terms of wear resistance, abnormal wear resistance, and reduced failure rates, demonstrating the universality of the technology. Zhongce Rubber will lead the electric commercial vehicle industry into a new chapter of high-quality development with superior quality, including greater safety, wear resistance, and energy efficiency.

At the press conference, numerous industry experts and opinion leaders shared their insights. They highly praised Zhongce Rubber's global debut of specialized electric commercial vehicle technologies and products, and the positive guidance they provide for the future development of the industry.

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