ANRPC sees ‘volatile’ rubber outlook despite demand growth

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.

Global production is estimated to have fallen 4.7% year-on-year to 997,000 tonnes in May, reflecting the seasonal wintering period as well as dry weather across Southeast and South Asia.

The association said Thailand's output is expected to recover to 260,000 tonnes in May from 137,200 tonnes in April, while China is forecast to post the largest monthly increase as tapping activity resumes in Hainan.

Global NR consumption is forecast to rise 1.3% year-on-year to 15.550 million tonnes in 2026, led by China, India, Malaysia and Cambodia.

The estimate is, however, lower than ANRPC’s projected consumption of 15.602 million tonnes at the beginning of the year.

May consumption is estimated at 1.310 million tonnes, up 4.6% year-on-year, supported by steady tire demand linked to EV growth, resilient manufacturing activity in China and India, and record passenger car sales in India.

Despite continuing trade disruptions, the ANRPC said the overall consumption outlook for 2026 remains "cautiously positive," with gradual growth expected throughout the year.