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Natural rubber prices have surged to the highest level in nearly nine years as demand rises amid heightened Middle East tensions and as many producers shift away from petrochemical-based rubber. Sri Trang Agro-Industry CEO Veerasith Sinchareonkul said tire makers and other customers are stockpiling to reduce the risk of supply disruptions.
Veerasith said customers typically hold inventories for about 1–2 months, but some have increased stockpiles to around 3 months. He added that the sharp rise in oil prices has lifted synthetic rubber prices, encouraging companies to move toward natural rubber.
“Natural rubber can partly replace synthetic rubber in products such as tires and gloves, so its price has risen accordingly,” he said.
QUICK-FactSet data show that TSR20 rubber futures on the Singapore Exchange rose to USD 2.22 per kilogram on May 7, the highest level since February 2017. Since the start of 2026, rubber prices have increased by more than 20%.
Bank of Ayudhya research indicates Thailand is the world’s largest natural rubber producer, accounting for about 34% of global production in 2024. Indonesia follows with 14%, while Ivory Coast and Vietnam account for 12% and 9%, respectively. Global production in 2024 totaled 14.9 million tonnes.
China remains the largest consumer, representing about 45% of global demand in 2024. Major tire makers including Michelin, Goodyear, Bridgestone and Continental have built plants in China, while domestic firms such as ZC Rubber and Linglong Tire are expanding rapidly, supported by the EV boom.
Bank of Ayudhya analyst Chaiwat Sowcharoensuk said the US–Iran conflict is driving inventory buildup and shifting demand toward natural rubber. He added that even if logistics disruptions ease and inventories return to normal, the structural shift could persist as long as global energy prices remain high.
Veerasith said concerns about weakening rubber demand are not a major issue while China’s purchasing power remains stable, noting that Chinese automakers are increasing their share of the global auto market.
In the medium to long term, Bank of Ayudhya forecasts that China’s natural rubber demand will grow more slowly and gradually approach production saturation. However, demand for higher-quality natural rubber is expected to continue rising as the EV market expands and premium tire exports grow.
Chaiwat said electric vehicles with heavy batteries and strong acceleration require tires with higher durability, boosting demand for high-quality natural rubber to withstand torque and wear. He described the shift as moving from growth based on output to a more stable model focused on quality.
Higher rubber prices may push retail tire prices up, according to an industry insider. A Japanese tire maker manufacturing in Thailand said it has been monitoring rubber prices since March and warned that it may need to pass higher costs to customers, also citing rising transport costs for raw materials due to the Middle East crisis.
Veerasith said prices above USD 2/kg are viewed as a healthy threshold that can materially improve Sri Trang’s financial results.
Sri Trang Agro-Industry recorded revenue of 113.4 billion Baht (3.5 billion USD) in the fiscal year ended December 2025. The company posted a net loss of 1.26 billion Baht in 2025, compared with a net profit of 1.67 billion Baht in the prior year.
With sustained demand, management aims to raise sales volume to 1.6 million tonnes this year, up from 1.4 million tonnes last year. Veerasith said profits are expected to recover if current price levels persist.
“If market conditions remain as they are, we will achieve very good profits,” he said.
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