CITIC Construction Investment Futures: Synthetic rubber supply contracts as oil supply decreases, anticipating a tightening outlook

Against the backdrop of ongoing geopolitical conflicts in the Middle East, market pricing has shifted from fundamentals to speculation, dominated by strong expectations driven by the geopolitical tensions. Until there is an actual easing of the conflict (only verbal agreements may have a limited or uncertain cooling effect on expectations), these strong expectations are likely to persist. Due to the conflict causing a sharp shortage in oil supply—especially in the Chinese market, which is heavily reliant on Middle Eastern oil—BR rubber supply is also expected to contract accordingly. Seasonally, BR rubber remains relatively weak in March each year, so its price increase tends to lag behind other petrochemical products. Looking ahead, the likelihood of the Middle East conflict being fully resolved and oil supply returning to pre-conflict levels in the short term is low; the uncertainty remains high, and tensions could escalate further. Therefore, it is expected that BR prices may still have some upward potential in the near term. (CITIC Futures)