Global rubber shortage looms by 2025

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The Association of Natural Rubber Producing Countries (ANRPC) reported that a senior industry official said that global natural rubber production is expected to be lower than consumption for the fifth consecutive year in 2025 as rising prices fail to stimulate tapping in major producing countries such as Indonesia and Vietnam.

Lekshmi Nair, senior economist at ANRPC, told Reuters on Wednesday: "Demand in countries such as China, India and Thailand has continued to grow, but production has lagged due to low prices (which only rose last year)."

the production shortfall is likely to cause global tire prices to remain firm (reaching a 13-year high by the end of 2024), thereby increasing production costs for tire companies.

According to ANRPC, global production is expected to grow by 0.3 per cent to 14.9 million tonnes by 2025, while demand is expected to grow at an even faster rate of 1.8 per cent to 15.6 million tonnes.

After more than a decade behind other grown crops such as oil palm, coffee and cocoa, rubber prices surged in the last quarter of 2024 as abnormal weather caused rubber production in Asian countries to drop.

Nair said that the current rubber shortage is due to the low rubber price in the past seven or eight years, which has led to a reduction in replanting area, a sharp slowdown in new planting area, and prompted rubber farmers to shift to more profitable crops.

Indonesia is the world's largest palm oil producer and the second largest rubber producer, but rubber production in the country is declining, mainly due to farmers switching to more profitable oil palm cultivation, she said.

Indonesia's output is expected to fall by 9.8 percent in 2025 from the previous year, for a total of 2.04 million tonnes, while Vietnam, the third-largest producer, is likely to fall by 1.3 percent to 1.28 million tonnes, according to ANRPC estimates.

In contrast, production in Thailand, the world's largest producer, is expected to grow by 1.2 percent by 2025 after falling by 0.4 percent in 2024.

She said that only West African countries such as Côte d'Ivoire have recently increased their rubber production, but this growth is not enough to meet the growing global demand, nor can it make up for the loss of production in Southeast Asia.

According to ANRPC estimates, rubber demand in China and India, the world's largest natural rubber consumers, is expected to grow by 2.5 and 3.4 per cent respectively this year.

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