US-Iran War Causes Natural Rubber Prices to Soar, May Be Passed on to Tire Retail Prices

Central News Agency, Bangkok, May 11 (CNA) – After the US and Iran went to war, demand for petroleum-based synthetic rubber declined, leading the market to shift to natural rubber, pushing prices to a nine-year high. A tire industry insider told Nikkei Asia that this could lead to a corresponding increase in tire retail prices. According to data from QUICK-FactSet, the price of technically specified rubber (TSR) TSR20 futures on the Singapore Exchange reached US$2.22 per kilogram on the 7th, a new high since February 2017, and has surged by over 20% this year. Due to its strength and elasticity, natural rubber is an indispensable material for products such as car tires and gloves. Veerasith Sinchareonkul, CEO of Sri Trang Agro-Industry, Thailand's largest rubber producer, pointed out that soaring oil prices led to an increase in synthetic rubber prices, affecting demand; and since synthetic rubber used in products like tires and gloves can be partially replaced by natural rubber, its price also surged. He stated that with tensions in the Middle East, customers such as tire manufacturers continue to increase natural rubber inventory to control supply risks. “Under normal circumstances, buyers would maintain 1 to 2 months of inventory; but now some customers might increase it to 3 months.” According to a survey by Bank of Ayudhya in Thailand, Thailand is the world’s largest natural rubber producer, accounting for 34% of global production in 2024; China is the largest consumer, with demand accounting for approximately 45% of global demand in the same year, reflecting its status as the world’s largest car tire producer. Chaiwat Sowcharoensuk, a rubber industry analyst at Bank of Ayudhya, believes that the trend of increased natural rubber demand caused by the US-Iran war is likely to continue. He said: “Even if (energy) supply disruptions ease and inventory levels return to normal after some time, this structural shift in demand is very likely to continue as long as global energy prices remain high.” An executive at a Japanese tire manufacturer with production in Thailand told Nikkei Asia that they have been closely monitoring the rise in natural rubber prices since March. “We may ultimately need to pass on the increased costs.” This person added that rubber transportation costs are also rising due to the Middle East crisis. (Editor: Chang Cheng-chien) 1150511. Choose to stand with facts, your every sponsorship is a force for protecting press freedom. Download CNA's "First-hand News" APP to stay updated with the latest news. The text, images, and videos on this website may not be reproduced, broadcast, or transmitted without authorization.