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A long-awaited daily limit-up—has spring arrived for the rubber sector?

Release Date:

2023-08-15

Recently, rubber-related contracts have posted strong gains: Shanghai rubber has been on a steady upward trajectory since mid-August, and on the first day of September it even recorded a long-awaited daily limit-up. That same day, newly listed synthetic rubber led the charge with an immediate limit-up, which in turn spurred both Shanghai rubber and RSS 3 to follow suit. This rare limit-up has sparked widespread speculation—could spring be returning for the rubber market?

The sharp rally across the rubber product spectrum was primarily driven by a catch-up move, fueled by capital inflows after prices had lingered at low levels. For an extended period, rubber prices remained subdued, and pent-up bullish sentiment finally erupted, with synthetic rubber leading the charge to hit the daily limit up, which in turn pushed the entire range of rubber varieties to their upper limits. In addition, recent fundamentals in the rubber industry have been underpinned by marginal positive factors: rainy weather in producing regions has disrupted raw‑material output, while some processing plants have actively competed for latex, pushing feedstock prices higher; meanwhile, midstream inventories have begun to decline from elevated levels, signaling an emerging inventory inflection point. Finally, bullish market sentiment has been strong across commodity markets lately, with frequent macro policy announcements bolstering expectations for related sectors going forward. Riding this wave of optimism, rubber has also enjoyed a notable rally.

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