Published April 2017
Asia continues to dominate the world supply of natural rubber, with 92% of total world production in 2016. The three largest natural rubber–producing countries in 2016 were all in Southeast Asia—Thailand, Indonesia, and Vietnam. Thailand is currently the largest producer, with Indonesia holding the second position; Vietnam is the third-largest producer. Malaysia, which accounted for 32% of world natural rubber production in 1988, has shifted emphasis to other crops and nonagricultural investments and produced only 6% of the world total by 2016. In recent years, Malaysia has developed a significant market for natural rubber latex used to produce dipped goods like gloves. This is one of the key reasons it has dropped out of the list of the top three solid natural rubber–producing countries.
The following pie chart shows world consumption of natural rubber:
Overall, tire production and tire weight greatly influence demand for natural rubber. Tires and tire products accounted for 70% of the total consumption of natural rubber in 2016. General rubber product uses include automotive and mechanical parts, medical and health-related products, and nonautomotive mechanical parts, which collectively account for the remaining 30% of natural rubber consumption. These shares are not expected to change in the next five years.
The shift toward radial tires, which use a higher percentage of natural rubber than bias-ply tires, has resulted in an increase in natural rubber consumption over the past 35 years. Between 1975 and 2008, natural rubber’s share of the total rubber market has increased from 32% to 44%; currently, the share is an estimated 42%. There have also been diverse government incentives to help develop the downstream rubber processing industry in Southeast Asia. As a result, natural rubber consumption has trended upward in these countries but the majority of production is still exported. This increased rubber consumption in the natural rubber–producing countries has been one factor, as well as the greatly increasing demand for natural rubber in China and India.
China continues to be the largest consumer of natural rubber in the world, accounting for nearly 37% of world consumption of natural rubber in 2016. China uses most (80%) of its natural rubber for tire manufacture. World demand for natural rubber will also be driven by Eastern European countries and other Asian countries, as tire production continues to move to these locations because of lower-cost labor and growing regional demand.
Recent trends in the world natural rubber market include the following:
- After the recession, the natural rubber market weakened, but growth returned in 2010 and 2011 as a result of government stimulus programs that supported the automotive and tire markets.
- During 2012–13, natural disasters in Asia (Japan, Thailand), coupled with the debt crisis in the eurozone, weakened the truck and bus market and the rubber product industries. The crisis in Europe reduced consumer confidence and a recession ensued, lowering demand for goods and therefore the need to move goods by truck.
- In 2014 and 2015, the market was in transition, as natural rubber was oversupplied, driving prices to decade-low levels. For much of 2014, natural rubber was able to capture low-end volume from synthetic rubber, especially in Asia. However, synthetic rubber prices fell in late 2014, following the sharp decline in crude oil and naphtha prices, allowing synthetic rubber to regain some of its lost market share.
- Production acreage has increased in Vietnam, Laos, Cambodia, Myanmar, and West Africa. Thailand and Indonesia will continue to account for most of the global production of natural rubber in the coming years (over 60%).
- The important investments made into new rubber trees in Southeast Asia while natural rubber prices were high (2005– 11) have led to significant rubber capacity increases seven years later. Natural rubber prices in early 2011 hit record high levels before they crashed in the middle of the year when it became apparent that Chinese demand growth would not continue at the extremely high rates seen in the previous few years. Consequently, the market has been oversupplied during the last three to four years.
Overall, natural rubber consumption will continue to be driven by demand for tires and tire products; this market grew at a rate of 2.5% per year in the last five years (2011–16) and is forecast to grow at 2.9% per year in the next five years (2016– 21). Consumption of natural rubber in general rubber products is also expected to increase at a rate of 2.9% per year during 2016–21, down slightly from the 3% growth rate observed in 2011–16.