Industry Outlook 2025-2027: Rubber Industry

As of 2023, export volume contracted -11.2% to 4.5 million tonnes^7/, and this then generated receipts of USD 6.2 billion (-23.9%). Declines were seen across almost all product categories, including RSS (-22.6%), TSR (-5.1%), concentrated latex (-30.0%), and mixed rubber (-0.4%). This came as a result of falling demand from both the main market of China (-0.5%) and the secondary markets of Malaysia (-30.2%), the US (-15.7%), Japan (-9.5%), South Korea (-48.7%) and France (-52.4%). In the year, the market suffered under the impact of: (i) slowing economies in overseas markets that then pulled down spending power; (ii) weaker purchases of downstream products (e.g., autos, auto parts, latex gloves, and medical devices^8/) and the resulting drop off in demand in upstream industries in originating nations; (iii) a slowdown in manufacturing industries and thus weaker demand for rubber from trade partners (at the end of 2023, stocks of rubber on the Shanghai and Japanese futures exchanges stood at respectively 189,951 and 5,199 tonnes, almost flat from the 186,702 and 5,004 tonnes recorded in 2022) (Figure 13); and (iv) an increase in exports to China from countries that have a cost advantage relative to Thailand^9/, especially Côte d’Ivoire (+81.2%) but also Vietnam (+12.3%) and Indonesia (+30.8%). The state of export markets through 2023 is described in detail below (Figure 14 and Figure 15).

• Ribbed smoked sheet: Exports slipped -22.6% to a total of 0.35 million tonnes, which then generated receipts of USD 566.3 million (-35.3%). The market was hurt by the -26.2% decreases in the Chinese market, these declines were driven by a drop-off in orders and the switch by Chinese buyers to sourcing goods from Myanmar (+13.8%) following earlier inflows of Chinese capital to the industry and Myanmar’s lower production costs for RSS. Similarly, exports to other markets also slipped, falling -37.7% to the EU, -19.9% to the US, and -13.3% to Japan on lower demand from downstream industries and the general slowdown in their economies. Alongside this, export prices fell back -16.3% to USD 1,598.6/tonne.

• TSR: Exports dropped -5.1% to 1.58 million tonnes, with export earnings down -20.0% to USD 2.26 billion. Exports were undercut by slowing economies in particular in the auto industry that then fed through weaker demand in secondary markets including South Korea (-52.8%), the EU (-24.5%), the US (-12.8%) and India (-19.6%). Given this, export prices also softened, falling -15.7% to USD 1,429.8/tonne (Figure 15). However, demand from the all-important Chinese market jumped 35.1% to 0.72 million tonnes as the relaxation of COVID-era controls and the reopening of the country allowed economic activity to rebound, and in particular, recovery in travel and transport provided a boost to the auto industry.

• Concentrated latex: Exports slumped -30.0%, falling to just 0.77 million tonnes, though receipts from this declined at the faster rate of -41.8% and these thus dropped to USD 805.7 million. Declines were driven by weakness in the main markets of China and Malaysia, where exports softened by respectively -37.4% and -29.6% to 0.27 million and 0.34 million tonnes. This followed the easing of the COVID-19 pandemic and falling demand for medical products and surgical gloves. Softness in the market was accelerated by the decision by the US authorities to ban the use of natural rubber in the production of the latter (to avoid potentially serious reactions among those allergic to proteins in the latex). Weaker demand then undercut prices and so in the year, these slipped -16.9% to USD 1,042.2/tonne.

• Compound rubber: Exports totaled 0.11 million tonnes (+2.7%), generating receipts of USD 273.3 million (-10.8%). Overall sales were helped by growth in the important Indian market (+29.8%) as well as Italy (+158.2%), Mexico (+99.5%) and Australia (+14.0%). However, this was countered by declines in sales to other major markets, including the US (-24.0%), the EU (-19.7%) and China (-7.5%). In these countries, the manufacturing sector endured depressed conditions, and this was then reflected in weakness in Manufacturing Purchasing Manager Indices (PMIs), which typically remained in sub-50 recessionary territory (Figure 16). Export prices also softened, falling -13.2% to USD 2,425.0/tonne.

• ​Mixed rubber: Exports slipped -0.4% to 1.62 million tonnes, while revenue weakened at the faster rate of -15.3% to fall to USD 2.25 billion. The market was hurt by the -0.9% declines in sales into the Chinese market, which accounts for a full 98.8% of all Thai exports of mixed rubber. This is largely consumed by the tire industry^10/ and although this benefited from the reopening of the country and the uptick in demand for EVs (which then boosted total imports of mixed rubber by 10.2%), the declining competitiveness of Thai suppliers has meant that Chinese companies have tended to import from lower-cost producers in Vietnam and Lao PDR.

The rubber industry continued to face contractionary conditions over 10M24 as the industry suffered under the impact of outbreaks of leaf drop disease and an El Niño that then raised temperatures and reduced rainfall. Given this, the agriculture production index for unsmoked sheet 3 fell -0.5% YoY, with losses also seen across intermediate production. Thus, MPIs for RSS, TSR, concentrated latex, and mixed rubber saw declines of respectively -10.1%, -1.5%, -10.9% and -17.4% YoY. However, supply moved against domestic and international demand, which was lifted by increased activity in downstream industries, most obviously the opening of new tire production facilities, increased investment by EV manufacturers, and stronger demand for automotive parts  and replacements following the reopening of the country and the subsequent rebound in both commercial activities and tourist arrivals. Supply shortages combined with favorable policies (e.g., the opening of EUDR-compliant rubber auctions^11/, the development of a rubber reference price^12/, and continuing crackdowns on the trade in illegal rubber) to lift average rubber prices, and so indices for unsmoked sheet 3 prices and rubber growers’ revenue are expected to have jumped by respectively 57.8% and 53.9% YoY (Figure 17). These factors will extend across the year, and thus for 2024 overall, the industry MPI is forecast to slide by between -0.5% and -1.5%, with output of intermediate goods contracting by between -3.5% and -4.5%. Likewise, prices will be up 57.0-59.0%, lifting farm incomes by 53.0-54.0%.

These upstream supply shortages weighed on production through the first 10 months of the year, and so the overall volume of intermediate goods that was available for domestic use contracted. In particular, the quantity of RSS and concentrated latex distributed to the market declined by respectively -2.7% and -9.7% YoY, though sales of TSR and mixed rubber bucked this trend to expand by 2.7% and 9.6% YoY, respectively. This came despite growing demand for rubber from downstream industrial consumers, in particular from: (i) the auto and auto parts industry, which is benefiting from growth in the EV segment and recovery in the tourism industry that is then driving increased demand from the service and transport sector for replacement parts, including spares (+6.7% YoY), auto tires (+4.2% YoY), truck tires (+5.2% YoY) and retreads (+3.0% YoY); and (ii) the medical supplies industry, where demand is up for surgical gloves (+13.1% YoY) and condoms (+77.8% YoY). Supply shortages will persist through the year and so the total quantity of intermediate goods distributed to the domestic market will contract by between -3.0% and -6.0% in 2024, bringing this down to 1.1-1.2 million tonnes^13/.

Exports of intermediate goods also softened over 10M24. These thus fell -5.3% YoY to 3.5 million tonnes, although earnings rose 19.3% YoY to THB 6.1 billion. China remains Thailand’s principal export target, given its 50.9% market share, followed by Malaysia (8.9%), the US (6.7%), Japan (5.9%) and India (4.5%). Weaker exports showed up in most product categories, with total exports down -24.6% to 1.04 million tonnes for mixed rubber, -14.8% YoY to 0.56 million tonnes for concentrated latex, and -4.8% YoY to 0.28 million tonnes for sheet rubber. However, growth was seen in some segments, namely TSR (+19.5% YoY to 1.53 million tonnes) and compound rubber (+0.7% YoY to 0.09 million tonnes). Overall overseas sales were down on weaker exports to the main market of China (-20.7% YoY), where declines were seen in sheet rubber (-56.2% YoY), concentrated latex (-43.8% YoY), compound rubber (-18.2% YoY) and mixed rubber (-25.6% YoY), although exports of TSR to China strengthened by 4.2% YoY thanks to growth in the Chinese auto industry, especially in the EV segment, where strong exports drove output to new highs. Sales were also lifted by firmer demand for TSR for use in the production of auto parts, where as elsewhere, demand was lifted by greater activity in the service, tourism and transport sectors and the resulting increase in demand for spares and replacement parts. Exports to some second-level markets performed better in the period as economies strengthened and global trade firmed up slightly, and so these rose to 23.5% YoY to the US, 29.9% YoY to India, and 25.1% YoY to Japan. These market dynamics will remain largely unchanged through Q4 and so for all of 2024, exports are expected to decline by between -6.0% and -7.0% to 4.1-4.2 million tonnes.

Price movements for rubber, in addition to the normal factors of supply, demand and stocks, rubber prices are also influenced by the state of crude markets, and so in 2022 and 2023, the correlation coefficient linking prices for Dubai crude and average monthly rubber prices rose to a 15-year high of 0.73 (Figure 18). This is because strong global demand has pushed up prices for oil-derived synthetic rubber, and as these have risen, manufacturers have increasingly turned to natural rubber alternatives. At the same time, global supply has come under pressure from drought, disease, and labor shortages, and the resulting supply shortages have lifted prices on both domestic and world markets. Given this, Thai prices for unsmoked sheet jumped 54.6% YoY to THB 70.2kg, while RSS export prices were up 40.2% YoY to USD 2,244.5/tonne. Likewise, these were also up 25.4% YoY to USD 1,775.3/tonne for TSR, 31.9% YoY to USD 1,363.4/tonne for concentrated latex, 8.5% YoY to USD 2,630.4/tonne for compound rubber, and 19.4% YoY to USD 1,643.8/tonne for mixed rubber. These changes broadly mirrored the 25.4% YoY increase in the price of TSR 20 (now at USD 1,711.8/tonne).

Outlook

The business environment should improve over 2025-2027, with increasing trends of both domestic sales and exports, hence more output.

• Production of intermediate goods will move in step with the general trend in growth in the global industry, and so this will expand by some 2.0-3.0% annually^14/. This positive outlook will be supported by: (i) the return of La Niña conditions, which are expected to have an impact for 1-2 years^15/. With better weather and greater access to water, yields will rise and output of upstream rubber will expand by 0.5-1.5% per year (Figure 19); (ii) the expansion in the area under cultivation that took place over 2003-2013^16/ and the extension of the growing area into the north and northeast in 2015, with plantations in these areas now entering the period of highest yields^17/; (iii) prices for rubber that have hit a 12-year high and that are incentivizing growers to look after plantations and to maximize yields. Nevertheless, growth will come under threat from the risk of outbreaks of disease, especially of both old and new strains of leaf drop disease^18/, and so some growers have switched to planting more profitable agroforestry products (e.g., durian and oil palm) or raising livestock (e.g., cattle and goats).

 

• Domestic sales quantity is expected to expand by some 2.5-3.5% annually (Figure 20), helped by: (i) stronger demand from downstream industrial consumers, in particular from the auto, auto parts, tire, and related industries, where demand will be boosted by the earlier rise in global investment in new semiconductor fabricating plants and the clearing of supply chain disruptions caused by chip shortages, and the stimulus effects of the EV 3.0 and EV 3.5 programs on the domestic output of BEVs. Also, demand from the construction industry will benefit from an acceleration in infrastructure development, especially transportation routes and projects in the EEC, and recovery in real estate markets, particularly for industrial and commercial properties; and (ii) government measures to both open up new distribution channels and absorb excess supply, including the establishment of the Southern Economic Corridor of Rubber Innovation (SECri), the development of carbon credit markets and mechanisms, the setting up of a rubber reference price, the development of the Thai Rubber Trade (TRT) digital platform to host rubber auctions, and the rollout of projects to ensure compliance with the EUDR regulations.

 

• Prices will tend to soften slightly, although Thai year-end stocks are expected to stand at 0.88 million tonnes in 2024, down from 0.96 million tonnes a year earlier. This movement will be in line with the general contraction in global stocks caused by the combined effects of drought and outbreaks of leaf drop disease seen in many producing nations (Figure 21). Domestic prices for unsmoked sheet 3 will thus tend to drift down to THB 65-75 as a result of: (i) the more than 50% jump in these seen in 2024; (ii) greater competition on price, especially from suppliers in neighboring countries; and (iii) the falling cost of crude. Thai export prices will then come under pressure, and over 2025-2027, these are expected to run in the range of USD 1.65-1.75/kg, down from USD 1.76/kg in 2024.

• Exports should expand by 2.5-3.5% annually, outpacing forecast growth in global demand for intermediate rubber goods of 0.5-1.5% per year, helped by: (i) Output by industrial consumers of rubber will strengthen, especially from auto assemblers and manufacturers of auto parts (for ICE-powered vehicles and EVs) in China, the US, Japan and Europe. Demand will be boosted by new laws requiring the more frequent replacement of tires, growth in new towns and cities that will add to travel times, and support for the purchase and use of EVs. (ii) As society ages, demand is increasing for medical devices for use in the treatment of the elderly (e.g., latex gloves and other rubber medical supplies). (iii) Problems with labor shortages, changes to weather patterns, and outbreaks of leaf drop disease are driving many growers to switch to planting oil palm and durian in place of rubber, especially in Indonesia, Malaysia, and the Philippines, thus tightening supply from competitors. (iv) The global crude oil price, which remains volatile due to periodic geopolitical tensions, has driven an increasing demand for natural rubber as a substitute for synthetic rubber in related industries^19/. The outlook for exporters in individual product segments is described below (Figure 22).​

  • Ribbed smoked sheet: Exports are forecast to expand by 2.5-3.5% per year. Although sales have been lifted by the widespread recognition of Thai RSS’s high quality, the effect of broader economic recovery on demand from downstream industries, and the rebound in the Chinese market following the relaxation of COVID controls, growth rates will be constrained by the erosion of Thailand’s competitive advantages by players in Cambodia, Lao PDR, Myanmar, and Vietnam (Figure 23).

  • TSR: Exports should increase by 2.0-3.0% annually on the back of recovery in downstream industries, particularly in the most important areas of auto, auto parts and tire manufacturing. In addition, production and use of EVs is on track to increase sharply in many countries, including in Thailand’s main export market of China, and this will then support substantially stronger demand for TSR for use in the production of tires and EV parts. Increasing activity in businesses connected to tourism, freight transport/delivery, and public transport will also lift demand for vehicle spares for use in repairs and servicing.

  • Concentrated latex: Distribution to export markets is expected to increase by 1.0-2.0% annually on continuing demand from manufacturers of latex gloves and rubber medical devices, thanks to the aging of societies, increased access to medical services across populations, the rising incidence of both infectious and non-communicable diseases, and continuing demand for public health products to protect against the spread of newly emerging diseases. Thailand’s main market for concentrated latex is Malaysia, which is also the world’s most important producer of latex gloves. However, growth potential within this segment is being limited by trade barriers and blocks on imports of downstream products. For example, to protect consumers against the risk of latex allergies, some US states have prohibited the use of gloves made from natural rubber within the food and healthcare industries^20/.

  • Compound rubber: This segment can look forward to annual export growth of 0.5-1.5%. Exports will be boosted by a gradual strengthening of demand in the principal markets of India, the US, China, and Europe. Nevertheless, high production costs will lift prices for compound rubber relative to other rubber products, but because the latter can be used in place of the former, export growth will be constrained.

  • Mixed rubber: Exports are forecast to grow by around 3.5-4.5% per year, due to stronger demand from the auto, auto parts, and tire industries. Because these contain a higher proportion of mixed rubber, demand will be particularly strong for tires for use with EVs. In addition, mixed rubber can be formulated to suit a wide range of applications as raw materials in various industries, such as daily-use items, electronics, aerospace, mining, transportation, construction, machinery, batteries, and chemicals. This will drive the growing demand for mixed rubber, aligning with the economic recovery of trading partner countries, particularly China, which remains a key market.

At the same time, the Thai rubber industry will face several challenges. (i) Chinese players have increased their investments in rubber plantations in the CLMV nations and production from these is now a growing presence in the market. This then raises the risk that exports to China, which has been Thailand’s most important market, may decline. (ii) The imposition of non-tariff barriers to trade may disrupt export markets, especially measures originating in importing countries that aim to increase the sustainability of the industry and to improve compliance with the laws of the importing nation and with international environmental standards (e.g., the EU Deforestation-free Products Regulation (EUDR)21/ and the Corporate Sustainability Due Diligence Directive or CSDDD)22/. Exports will also be affected by the enforcement of measures to encourage the production and use of sustainable downstream products. This will include the US ban on the use of latex gloves in the services sector, the health and food industries, an increase in reliance on products made from recycled inputs, and reductions in carbon emissions across the supply chain, but meeting these goals will result in higher costs for manufacturers. (iii) Supply shortages may emerge as a result of both natural and human-driven factors, including increasing climate uncertainty, ongoing outbreaks of new and existing strains of leaf drop disease, labor shortages, and the switch to alternative crops by some growers. (iv) High costs as a result of the current international political environment that may periodically impact crude prices and push up the costs of inputs (e.g., fertilizer, chemicals23/, and energy).

Measures to improve the sustainability of the rubber industry

• Changes to the regulatory environment and improved compliance with this, including in particular the EU Deforestation Regulation (EUDR).

  • The government is attempting to raise the standards of the domestic rubber industry and to put this on a sustainable footing, as per Forest Management Standard 14061. This covers all aspects of rubber farming, from planting, through crop care, to harvesting and production of goods, as well as the registration of farmers, plantations, processors, and processing plants. This will then help players across the supply chain demonstrate legal compliance, assist with tracking and supply chain provenance, and bring management to align with the 20-year strategic plan for the rubber industry (from 2017 to 2036).

  • The private sector is making changes to the sourcing of inputs, production processes, and product development as it looks to align these with the regulatory requirements enforced in Thailand and overseas markets. This will help to secure both access to these markets and to sources of financing from institutions supporting ESG and SDG.

• Support for the ESG and SDG initiatives will build confidence among communities and stakeholders. This will include action in the following areas.

  • Environment: This will include the use of environmentally friendly production processes, cuts to greenhouse gas emissions, more efficient use of energy and water, and ensuring that wastewater treatment meets accepted standards. Additional measures may include participation in projects targeting reforestation, dam building, and rewilding and ecosystem restoration, the use of filters to manage air quality and to reduce the release of noxious odors, and better separation and collection of waste products across supply chains.

  • Social: In this area, players may help to build public awareness, better manage environmental and safety issues, ensure compliance with environmental and biosecurity regulations, and provide support to local communities. This could be through ensuring that labor is hired locally, supplying emergency relief when natural disasters occur, providing support for cleaning and educational initiatives, and donating company products to local recipients.

  • Governance: In this area, the focus will be on transparency and accountability across all areas of procurement and employment, the disclosure of important information, the fair and equitable treatment of all staff, the fair sharing of profits, good customer relations, and maintaining a strong organization-wide anti-corruption stance.

1/ Crepe rubber is made by cleaning cup lump and rubber scraps and then rolling this into sheets that are dried through exposure to the sun or by using hot-air dryers. This is then generally used to produce brown crepe rubber. This form of processing is mostly practiced in the south of the country, though it is becoming more popular among growers in the north and north-east of Thailand.
2/ Rubber farmers may sell either to middlemen or directly to midstream processors.
3/ Precursors used in the manufacture of synthetic rubber include butadiene, which is produced from oil. Important types of synthetic rubber include styrene butadiene rubber (SBR), butadiene rubber (BR), ethylene propylene-diene rubber (EPDM), nitrile butadiene rubber (NBR), chloroprene rubber (CR), isoprene rubber (IR), isobutylene isoprene rubber (IIR), and styrene block copolymer (SBC).
4/ Thai intermediate rubber production encompasses sheet rubber, technically specified rubber, concentrated latex, compound rubber, and mixed rubber. (Calculated from the value of goods distributed to export and domestic markets).
5/ In 2023, per unit yields were down -4.8 kg/rai in the north, -4.1 kg/rai in the south, and -3.8 kg/rai in both the northeast and the central region.
6/ This is calculated exclusively from the dry rubber content (DRC) and does not include water or any other chemicals that are mixed with this.
7/ As per confirmed weight at customs check points. Calculated by the DRC, the total weight came to 4.0 million tonnes. For concentrated latex, the DRC averages 60% of the total weight, while for compound and mixed rubber, the DRC is 80%-95% of the total.
8/ This was a result of a relaxation of pandemic controls in many countries and the successful rollout of vaccine programs, especially in China, where restrictions were lifted and the country reopened on 8 January, 2023.
9/ 2023 prices for RSS averaged USD 1,344/tonne in Lao PDR, USD 1,179/tonne in Myanmar, and USD 1,040/tonne in Vietnam. The gap between these prices and those in Thailand is partly due to the high cost of Thai TSR and RSS rubber. In particular, prices for chemicals (the ammonia and acids used in the production process) have risen with the result that in Thailand, production costs for RSS have climbed (source: Trademap and the Rubber Authority of Thailand, calculated by Krungsri Research).
10/ In China, some 76% of rubber is used in the manufacture of tires. This is followed in importance by production of latex gloves, pillows, and condoms (12%) and belts, hosing, shoes, shock absorbers, and other items (12%) (source: Xueqiu, DIPT).
11/ This is rubber that meets the supply chain and provenance checking required by the EU’s European Union Deforestation Free Regulation (EUDR).
12/ The Thailand Futures Exchange (TFEX) and the Rubber Authority of Thailand have signed a memorandum of understanding to set rubber reference prices, that is, prices for RSS 3, TSR, and concentrated latex. This will be used in both domestic and international trades.
13/ This is calculated exclusively from the dry rubber content (DRC) and does not include the water or any other chemicals that are mixed with this.
14/ This is on the assumption that rubber trees are not permanently taken out of production and rubber producing countries in Asia do not cooperate to reduce supply to the market.
15/ Data from NOAA (National Oceanic and Atmospheric Administration) show that the last El Niño occurred in 2023-2024, and there is a reasonable possibility that La Niña conditions will emerge in 2025. Krungsri Research sees the effects of the latter lasting for 1-2 years.
16/ This is a result of government schemes that ran over 2003-2013 that had the goal of expanding the total area of rubber plantations by 1 million rai.
17/ Typically, rubber trees begin to produce their greatest yields after 7 years.
18/ Leaf drop disease began to appear in Thailand in 2019, and with both older and new strains now reported in all rubber cultivars, this has continued to be a problem through to the present day. The current outbreak is driven by the spread of Pestalotiopsis sp. and Colletotrichum sp., which can be transmitted by air, water, or by the movement of infected plants or planting materials. In affected areas, yields typically drop by 30-50% and the growth of affected trees is halted.
19/ The share of total rubber consumption accounted for by synthetic rubber is estimated to have risen from 49.7% in 2022 to 50.7% in 2023.
20/ These have been in effect in the food and healthcare industries since respectively January 1st, 2023, and January 1st, 2024. The US is the world’s most important importer of gloves manufactured from natural rubber, and is Thailand’s second biggest export market for sales of general-purpose and surgical gloves (source: Rubber Authority of Thailand).
21/ The EU Deforestation-free Products Regulation (EUDR), or Regulation (EU) 2023/1115, came into force on December 30th, 2025. This regulates imports into the EU products for goods in seven categories that are linked to deforestation, namely timber, beef, cocoa, coffee, oil palm, soya and rubber, together with related products. Importers of these are now required to produce a due diligence statement affirming that the company has carried out appropriate provenance and supply chain checking and that it has been assured that the production of these goods has not resulted in any deforestation or the breaking of any laws in the originating country.
22/ The EU Directive on Corporate Sustainability Due Diligence Directive (CSDDD) has been in force since June 23rd, 2024, and specifies the duties and responsibilities of organizations as these relate to social and environmental sustainability. In particular, this bears on manufacturing industries supply chains from production to distribution (e.g., for textiles, garments, footwear, minerals, fossil fuels, forestry goods, rubber, livestock, farming, and food processing).
23/ Increases in prices for the chemicals used in processing rubber/RSS have impacted farmers’ production costs, and as a result, some have cut back on fertilizer applications, though this results in a drop in the dry rubber content of harvested latex from 30-35% to 25-29%.