Rubber is a species of woody tree with significant economic importance due to the sap-like liquid it produces (called latex), which can be collected as a primary source for producing natural rubber. It is a perennial industrial crop that requires nurturing for about 5-7 years before reaching the stage where latex can be harvested. Rubber cultivation also brings environmental benefits, such as greening barren land and preventing soil erosion.

Natural rubber has unique properties like high elasticity, durability, resilience, and minimal heat generation during use. These characteristics make natural rubber an ideal material for producing specialized products like tires, medical gloves, and footwear. 

Particularly in the automotive industry, up to 70% of the total global consumption of natural rubber is used in tire manufacturing.

The threat of being replaced by synthetic rubber (SR) has significantly decreased since 1990 due to the technical limitations that synthetic rubber cannot match compared to natural rubber (NR). As a result, price fluctuations will follow the supply-demand situation.

Supply-Demand Relationship

Rubber trees are commonly grown in the Asia-Pacific region, especially in Southeast Asian countries (accounting for 70% to 75% of the global rubber planting area and latex production).

Countries like Côte d'Ivoire, Vietnam, India, and China currently supply nearly 30% of the world's natural rubber production. Two countries, Thailand and Indonesia, contribute 47.6% and 51.1% of the global rubber planting area and latex production, respectively, in 2022. However, these countries have consistently recorded a decline in supply from 2018 to 2023. PHS predicts that this situation will continue in the future.

Source: Phu Hung Securities

In 2023, the Association of Natural Rubber Producing Countries (ANRPC) estimated that global consumption of natural rubber reached 15.5 million tons (+9.1% year-over-year), while production amounted to 15.14 million tons (+3.4% year-over-year), resulting in a supply shortfall of approximately 0.36 million tons. This supply shortage first emerged in early 2021 and reappeared in 2023, following a period of balance in the latter half of the 2010-2020 decade.

Natural rubber is currently consumed the most in China, accounting for an average of 40% of global production from 2015 to 2022. Other markets such as India, the United States, Thailand, and Japan each consume more than 5% of the world's natural rubber output. According to Phu Hung Securities (PHS), global consumption is rapidly recovering, estimated to increase by 9% in 2023 to reach 15.5 million tons, following a period of decline due to the COVID-19 pandemic and the U.S.- China trade war.

Source: Compiled