Extreme Weather Adds Fuel to the Fire: Natural Rubber Prices Hit Nine-Year High(Oct 13)

Extreme Weather Adds Fuel to the Fire: Natural Rubber Prices Hit Nine-Year High

Futures Break RMB 20,000/Ton Mark

Natural rubber futures on the Shanghai Futures Exchange (SHFE) broke through the RMB 20,000/ton mark in late September, reaching the highest level since 2017. As of October 12, the SHFE natural rubber main contract closed at RMB 20,640/ton, up 2.08% on the day, having briefly surpassed the RMB 21,000 level. In the spot market, the domestic average price rose to RMB 19,700/ton as of October 9, up 28.27% year-to-date and 31.45% year-on-year.

Super El Nino Drives Production Cut Expectations

The super El Nino event is a key catalyst. According to the National Climate Center, a super El Nino officially formed in September 2026, with sea surface temperatures in the equatorial central-eastern Pacific expected to continue rising, potentially making it one of the strongest events since 1950. The World Meteorological Organization also noted this El Nino could persist into early 2027.

Natural rubber production is highly climate-dependent. Southeast Asia accounts for over 70% of global output, with Thailand, Indonesia, Vietnam, and Malaysia as the top producers. Persistent drought inhibits latex secretion, while heavy rainfall reduces tapping days. Both scenarios disrupt supply. Currently, southern Thailand, parts of Indonesia, and Vietnam are experiencing weather anomalies.

Structural Supply Tightening

Beyond weather, the global natural rubber supply is showing signs of structural tightening. According to the Association of Natural Rubber Producing Countries (ANRPC), 2026 global production is forecast at approximately 15.04 million tons, up only 0.6% year-on-year, below the previously forecast 2.1%. Global demand is projected at 15.36 million tons, creating a supply gap of approximately 317,000 tons. Indonesia production is expected to decline 8%, Malaysia 10.9%, and Vietnam 4.2%, while Thailand may grow 1.9%.

Rubber trees require 6 to 8 years from planting to tapping, and 13 to 15 years to reach peak production. The previous prolonged low-price period suppressed planting enthusiasm, and aging trees are reducing yields. As Guangfa Futures noted, global natural rubber supply has entered a phase of slowing growth, amplifying price sensitivity to weather disruptions.

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