Asian rubber prices fall sharply after EU delays deforestation regulation

The Asian rubber market saw a sharp decline in prices Oct. 11, as concerns over a natural rubber supply crunch eased following the EU's proposal to delay its deforestation regulation (EUDR) by 12 months, according to market sources.

The regulation was originally set to take effect Dec. 30 this year, prohibiting imports of commodities linked to deforestation, including palm oil, soybeans, timber, rubber, coffee, cocoa and cattle.

The implementation of the plan has now been postponed to December 2025 for large companies and June 2026 for small enterprises.

Asia's natural rubber prices had been on an uptrend following the EU's announcement of the new regulation earlier this year, as the rule was expected to decrease natural rubber production in the region.

Following the announcement of the delay, the Asian rubber market quickly lost momentum, with prices of Technically Specified Rubber 20 (TSR 20) on an FOB Southeast Asia basis falling around $50 per metric ton on the week to $2,000/t on Oct. 11, market sources said.

China's rubber futures continued to decline Oct. 11 following the news, with the November polybutadiene rubber futures on the Shanghai Futures Exchange declining Yuan 175/t on the day to Yuan 15,610/t early in the day, after losing more than Yuan 700/t the previous day, according to exchange data.

December TSR 20 futures on the SHFE have also dropped Yuan 260/t to Yuan 14,075/t so far today, following a decline of more than Yuan 600/t on Oct. 10, exchange data showed.

Meanwhile, China's local synthetic rubber prices fell Yuan 200-400/t on the week, according to market sources.

The Asian butadiene market was also declining, tracking the weakness in the downstream market, although the price drop was occurring at a much more moderate pace.

Platts, part of S&P Global Commodity Insights, assessed CFR China butadiene down $10/t on the day at $1,580/t on Oct. 10.

Deepsea butadiene supplies are available from Europe and the US, but the offered levels are considered relatively high, reflecting elevated freight rates.