Natural rubber outlook “cautiously constructive” amid trade, geopolitical risks

Kuala Lumpur – The Association of Natural Rubber Producing Countries (ANRPC) has maintained a “cautiously constructive” outlook for the natural rubber (NR) market, while warning that prices are likely to remain volatile amid geopolitical tensions, trade disputes and supply-side uncertainties.

In its latest monthly market report, published 30 May, ANRPC said the broader economic backdrop remains challenging amid “escalating US-China trade tensions,” and the ongoing Middle East conflict and its impact on global energy markets.

“Looking ahead, the near-term outlook for the natural rubber market remains cautiously constructive, though subject to heightened price volatility as global events continue to unfold,” the association said.

According to ANRPC, trade tensions between the US and China remain a key risk factor after high-level discussions in April failed to produce a clear agreement.

The continuing friction between the world's two largest economies “risks slowing the world economy and disrupting normal demand for rubber-based products such as tires and gloves,” the association said.

At the same time, military tensions involving Iran, Israel and the US have created significant disruption in energy markets and a 40% increase in oil prices.

ANRPC also highlighted developments in the automotive sector as a supportive factor for rubber demand.

The global automotive industry, it said, continues to shift toward electric vehicles, with EV adoption growing rapidly not only in China but also across Southeast Asia, Latin America and South Korea.

Within the NR sector itself, ANRPC identified several factors likely to affect market dynamics in the coming months.

The association warned that “unusually high temperatures in major rubber-producing countries,” arriving just ahead of the annual low-yield season, are likely to constrain output.

At the same time, broader economic uncertainty and existing tariffs could disrupt trade flows and lead to higher inventories of both raw rubber and finished products.

“Such a build-up of inventories may limit price gains even if demand continues to grow,” ANRPC said.

As a result, the association said, “the near-term outlook for the natural rubber market remains cautious, with prices likely to experience increased ups and downs as global events unfold.”