Core Viewpoint - The supply-demand dynamics indicate a continuation of a loose market environment, characterized by increased production and imports against weak demand and high inventory levels. Price expectations suggest that rubber prices may continue to fluctuate downwards, with a potential further contraction in the RU-NR price spread [1][25]. Supply Side - From January to April, China's natural rubber production increased by 26.15% year-on-year, currently in a seasonal growth phase. However, frequent rainfall in domestic production areas has delayed the concentration of raw material supply, leading to strong raw material prices as processing plants rush to collect materials. Improvement in weather conditions is anticipated to alleviate the tight supply situation [4]. - In early May, Thailand announced a one-month delay in tapping, but production has since resumed, with a year-on-year increase of 4.39% from January to April. Vietnam's production also saw a year-on-year increase of 2.10% during the same period. Although initial raw material output is slow due to weather disturbances, entering the peak production season may strengthen raw material supply expectations [4]. Demand Side - As of May 22, the operating rate for semi-steel tires was 73.74%, up 2.53% month-on-month but down 6.35% year-on-year. The operating rate for all-steel tires was 62.09%, up 2.21% month-on-month but down 4.11% year-on-year. The decline in rubber prices has led to increased caution among downstream producers, with only essential purchases being maintained. Despite a slight increase in production and sales of passenger vehicles, overall demand growth remains slow, and tire companies are facing high finished product inventories, which may lead to a downward adjustment in future operating rates [15][25]. - According to customs data, tire export figures for April showed a month-on-month decline, with all-steel tire exports down 5.43% and semi-steel tire exports down 10.39%. Although previous US-China negotiations had a positive impact on the market, strict tariff policies on Southeast Asian regions may continue to challenge tire export trade [23]. Market Outlook - The overall supply-demand situation remains loose, with expectations of increased natural rubber supply and high inventory levels in downstream tire companies, leading to a strong likelihood of downward adjustments in operating rates. The slow growth in terminal demand makes it difficult for upward price transmission, suggesting that rubber prices may continue to experience downward fluctuations, with the RU-NR price spread likely to contract [25].