Introduction to Rubber

Natural rubber has unique properties such as high elasticity, durability, resistance, and minimal heat generation during use. This makes natural rubber an ideal material for producing specialized products like tires, medical gloves, and footwear.

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

Additionally, the risk of being replaced by synthetic rubber has significantly decreased since 1990 due to the technical limitations that synthetic rubber cannot achieve, unlike natural rubber. This affects the fluctuations in the supply-demand correlation.

Supply-Demand Correlation

Rubber trees are predominantly grown in the Asia-Pacific region, especially in Southeast Asian countries, which account for 70% to 75% of the global planting area and latex production.

In 2023, the Association of Natural Rubber Producing Countries (ANRPC) estimated global natural rubber consumption at 15.5 million tons (+9.1% compared to the previous year). However, a supply shortage began in early 2021 and reoccurred in 2023, following a period of balance in the latter half of the 2010s. The chart below illustrates the global production and consumption of natural rubber.

China is currently the largest consumer of natural rubber (averaging 40% of global production from 2015-2022). Markets like India, the US, Thailand, and Japan consume over 5% of the global natural rubber supply. According to the chart, global consumption has rebounded at a fast pace, with an estimated 9% increase in 2023, reaching 15.5 million tons, following a decline due to the COVID-19 pandemic and the US-China trade war.

Rubber Price Trends in 2024 and Forecast

In the latter half of 2022 and the first half of 2023, rubber prices were adjusted and maintained at low levels due to weak demand in consumer markets. Rubber prices on the TOCOM exchange began to rise again in Q3 2023. Specifically, rubber prices increased for six consecutive months starting August 2023, with a rise of 20% to 30% for TSR20 and RSS3 grades, thanks to strong recovery in major markets like China, India, and Thailand in the latter half of 2023.

It is forecasted that global natural rubber consumption may maintain a growth rate of 4% to 6% per year, driven by the recovery of the global automotive and tire industries. Meanwhile, global natural rubber supply is expected to grow only around 1% to 3% annually. Additionally, 2024 is anticipated to be a challenging year for rubber trees due to the transition between El Niño and La Niña phenomena, causing significant fluctuations in the high-harvest season in Southeast Asia. Moreover, supply has decreased significantly as businesses have shifted to other industrial crops during previous periods of sharp price declines. As a result, experts forecast that global rubber supply might fall short by approximately 600,000 to 800,000 tons annually from 2024 to 2025, as demand grows faster than supply. This will likely lead to continued upward trends in natural rubber prices from 2024 to 2026.

Overall, the rubber price trend on the TOCOM exchange in the first five months of 2024 shows an upward trend as anticipated. However, in the short term, factors such as the USD and oil prices, which have a positive correlation with rubber prices, need to be monitored closely. The trend of declining oil prices since April may also dampen the increase in rubber prices.

Currently, domestic investors can trade RSS3 and TSR20 rubber futures contracts through the Vietnam Commodity Exchange (MXV), linked with major rubber exchanges like TOCOM and SGX.