Report Industry Investment Rating No relevant content provided. Core Viewpoints - Affected by the conflict in Indonesia, the supply expectation of rubber has been disturbed. The market is worried that the rubber production and export of the world's second-largest rubber-producing country may decline due to the riots. Supported by bullish factors, China's rubber futures showed a volatile and stable trend this week. It is expected that China's rubber futures may maintain a volatile and stable trend in the future [5][11]. - Although the main rubber-producing areas in Indonesia are not directly damaged at present, the riots have posed potential threats to its industrial chain through multiple channels such as labor, logistics, and policy confidence. In the short term, production may fluctuate, and export delivery faces a risk of delay; in the long term, it depends on whether the government can effectively resolve social conflicts and rebuild governance credibility. If the situation continues to be turbulent, Indonesia's position in the global natural rubber market may be challenged [6][29]. Summary by Directory 1. Market Review - The spot price oscillated and rebounded, and the basis widened [1]. - The futures price rose, and the monthly spread turned to premium [1]. 2. Rubber Market Supply and Demand - The rubber production of producing countries has steadily recovered, increasing the supply pressure [5]. - The tire operating rate has slightly recovered [5]. - The sales volume of the automobile market has significantly improved [5]. - The inventory of the Shanghai Futures Exchange has recovered, and the inventory in the Qingdao Free Trade Zone has increased [5]. 3. Preface - In late August 2025, large-scale demonstrations broke out in multiple cities in Indonesia, causing casualties. The trigger was the high housing subsidies for members of parliament approved by the Indonesian Congress and a series of controversial remarks made by the members. The turmoil in Indonesia may have a profound impact on the rubber supply and export pattern [10]. 4. Supply Expectation Disturbance and Rubber Volatility Stabilization - Since September, affected by the conflict in Indonesia, the supply expectation of rubber has been disturbed. The market is worried that the rubber production and export may decline. Supported by bullish factors, China's rubber futures showed a volatile and stable trend. The Shanghai rubber futures 2601 contract traded in the range of 15,720 - 16,135 yuan/ton, and the standard rubber futures 2511 contract traded in the range of 12,605 - 12,935 yuan/ton. It is expected that China's rubber futures may maintain a volatile and stable trend in the future [11]. 5. Root Causes of the Riots in Indonesia - The root causes of the large-scale protests in Indonesia are economic inequality, policy conflicts, and the failure of democratic reform. The riots have caused serious consequences, including traffic paralysis, arrests, arson, and a decline in the stock market [20][21]. 6. Indonesia as an Important Rubber-Producing Country - Indonesia is the world's second-largest natural rubber producer. Its rubber plantations are mainly concentrated in Sumatra and Kalimantan. Sumatra features large-scale and intensive production, while Kalimantan is in the stage of scattered small farmers with great potential for future production increase [22]. 7. Impact of the Riots on Rubber Production and Export in Indonesia - The El Niño phenomenon in 2024 had a negative impact on Indonesia's rubber production. In 2024, the total rubber production was 2.3443 million tons, a year-on-year decrease of 758,000 tons, a decline of 24.43%. From January to June 2025, the total rubber production was 1.1761 million tons, a year-on-year decrease of 73,800 tons, a decline of 5.90%. From January to June 2025, the total export volume of natural rubber was 892,000 tons, a year-on-year increase of 108,500 tons, an increase of 13.85%. If the riots continue, rubber production and export may further decline, and international rubber prices may rise [25]. - The riots may affect rubber production through labor shortages and logistics disruptions, impact exports through port operations and supply chain stability, and shake policy confidence and foreign investment [26][27]. 8. Conclusion - Although the main rubber-producing areas in Indonesia are not directly damaged at present, the riots have posed potential threats to its industrial chain. In the short term, production may fluctuate, and export delivery faces a risk of delay; in the long term, it depends on whether the government can effectively resolve social conflicts and rebuild governance credibility. If the situation continues to be turbulent, Indonesia's position in the global natural rubber market may be challenged [6][29].