Core Viewpoint - The rubber futures market in China is experiencing a divergence, with natural rubber showing slight weakness while synthetic rubber continues its strong performance, driven by supply concerns and market dynamics [2][3]. Group 1: Market Performance - Natural rubber futures for the main contract 2605 closed at 16,195 yuan/ton, down 0.37%, while synthetic rubber contract 2603 closed at 13,515 yuan/ton, up 225 yuan/ton, a rise of 1.69% [2]. - Since January, synthetic rubber futures have seen a cumulative increase of 17%, compared to only 3% for natural rubber futures [2]. Group 2: Supply Dynamics - The recent rise in rubber prices is attributed to both funding and fundamental factors, with a notable increase in capital inflow into the chemical sector [2]. - The supply of butadiene, a key raw material for synthetic rubber, is expected to be tight in the first half of 2026 due to no new production plans and increased downstream demand from new capacities [3][4]. - Global production growth of natural rubber is slowing, with eight out of the top ten rubber-producing countries experiencing a shift from positive to negative cumulative production growth from 2019 to 2024 [4]. Group 3: Domestic Production Insights - Domestic synthetic rubber production is projected to increase significantly in 2025, with BR-grade styrene-butadiene rubber expected to see an annual increase of over 20%, amounting to nearly 300,000 tons [5]. - However, there are signs of reduced production in synthetic rubber recently, with production growth rates slowing for both butadiene and styrene-butadiene rubber [5]. Group 4: Tire Industry Performance - As of January 22, the capacity utilization rate for semi-steel tires in China was 73.84%, up 1.31% month-on-month and 8.92% year-on-year, while the utilization rate for all-steel tires was 62.53%, down 0.49% month-on-month but up 22.14% year-on-year [6]. - The tire industry is experiencing a mixed performance, with semi-steel tires benefiting from foreign trade orders, while all-steel tires face increased shipping pressures [6][7]. Group 5: Future Outlook - The rubber market is expected to remain strong in the first quarter, with natural rubber's upward potential limited compared to synthetic rubber due to supply discrepancies [8]. - Mid-term projections suggest that synthetic rubber will likely maintain a strong position, driven by the volatility of butadiene prices and ongoing supply dynamics [9].