Rubber Futures Rise with Oil but Face Supply Headwinds

Rubber futures in Japan and China have shown a slight increase following stabilization of oil prices. However, this uptick is largely due to the synthetic rubber component, which competes with natural rubber.

The bigger drivers of the market at present are seasonal supply and the auto slowdown. In July, China's Vehicle Inventory Alert Index rose to 61.1%, indicating that dealers are focused on clearing inventory rather than pushing new orders.

This means fewer new tire orders up the supply chain, according to analyst Zhang Xiao at Guoyuan Futures. He expects tire demand to remain low through mid-August due to seasonal factors.