Trade tensions, geopolitical risks cloud outlook, while tight supply, lower EU anti-dumping duties support higher prices

Kuala Lumpur – The natural rubber (NR) market is expected to face both “opportunities for price appreciation” and “heightened volatility" over the coming months as global macroeconomic pressures and geopolitical risks continue to shape supply and demand.

In its monthly NR review for May, the Association of Natural Rubber Producing Countries (ANRPC) said elevated US-China trade tensions, the Iran war, and expectations that the US Federal Reserve will hold interest rates steady could dampen demand for rubber products.

At the same time, the association said accelerating EV adoption rate in Southeast Asia, Latin America and and South Korea was “potentially reshaping long-term demand patterns for rubber.”

Furthermore, “unusually high temperatures” in major rubber-producing countries, combined with rainfall disruptions during the early tapping season, have kept raw material supplies low and prices elevated.

According to ANRPC, the recent EU decision to lower anti-dumping duties on Chinese tires has also provided “additional positive momentum for market sentiment.”

Meanwhile, falling oil prices supports are easing cost pressure and “dragged down” butadiene and synthetic rubber costs, it added.

As for supply and demand, the ANRPC projected that global NR production to increase 2.4% year-on-year to 15.337 million tonnes in 2026, from 14.971 million tonnes in 2025.

The projection is up slightly from 15.324 million tonnes estimated at the beginning of the year, driven by higher output in Thailand, China, India and Malaysia.

Production, however, is forecast to decline in Indonesia and Vietnam.

Source: ERJ