The natural rubber market is expected to fluctuate and rise in 2024. According to the monitoring of SunSirs, as of December 31, 2024, the domestic natural rubber market price was 16,890 RMB/ton, an increase of 29.33% from 13,060 RMB/ton at the beginning of the year.
At the beginning of the year, as the Spring Festival approached, downstream construction significantly decreased, resulting in light trading in the natural rubber market and a low price consolidation with no market. After the Spring Festival, due to the combined effects of multiple factors such as El Niño phenomenon, aging of rubber trees, and shortage of rubber cutting workers, natural rubber raw material cutting in major production areas around the world has almost come to a halt, and the prices of natural rubber raw materials at home and abroad have continued to rise, driving a significant increase in domestic natural rubber prices.
At the beginning of the second quarter, with the improvement of production area cutting and the pressure of total social inventory, natural rubber prices experienced a decline. In the mid to late second quarter, the cutting process slowed down again due to continuous rainfall in domestic and overseas production areas, coupled with the continuous destocking of natural rubber prices at ports, which rose again until early June.
At the end of the second quarter to the beginning of the third quarter, on the one hand, the terminal tire market was not optimistic about shipments, and the production of all steel tires declined. Downstream demand for high priced natural rubber sources was relatively resistant. In addition, due to suitable domestic and international climates, the high prices of natural rubber raw materials fell, and the comprehensive demand and cost dragged down, resulting in a significant drop in natural rubber prices.
Starting from mid to late August of the third quarter, Thailand's production areas were affected by continuous rainfall and floods. In addition, the typhoon in September had a significant impact on the rubber production areas, making it impossible to carry out rubber cutting work during this period. The natural rubber raw material market at home and abroad was extremely scarce, and raw material prices rose again, further promoting a significant increase in domestic natural rubber prices, reaching the highest point of the year at the end of September.
In the fourth quarter, the weather in the main production areas entered a prosperous season with normal conditions, and the output of raw materials increased significantly. The prices of natural rubber raw materials at home and abroad fell from high levels. In addition, domestic port inventory has once again entered the accumulation stage, which has a bearish impact on natural rubber prices. However, the domestic downstream production of semi steel tires continues to remain at a high level, while the production of all steel tires has increased, and the demand is supported by the demand for natural rubber. The overall range of natural rubber prices fluctuated in the fourth quarter under the comprehensive influence.
Current situation of natural rubber fundamentals
In 2024, the global production of natural rubber increased year-on-year, domestic imports decreased year-on-year, and downstream tires in China increased year-on-year. Overall, the fundamentals of natural rubber in China improved in 2024, providing strong support for the natural rubber market.
The latest November 2024 report released by ANRPC predicts that global natural rubber production is expected to decrease by 1.1% to 1.417 million tons in November, an increase of 3.7% from the previous month, and an increase of 2.3% to 12.691 million tons in the first 11 months; The global production of natural rubber is expected to increase by 4.5% year-on-year to 14.539 million tons in 2024. Among them, Thailand decreased by 0.4%, Indonesia increased by 12.3%, China increased by 4.1%, India increased by 6%, Vietnam decreased by 2%, Malaysia increased by 0.6%, Sri Lanka increased by 21.9%, and other countries increased by 11.6%.
In terms of imports, according to customs data, the cumulative import volume of natural rubber in China from January to November 2024 was 5.0191 million tons, a year-on-year decrease of 14.86%. The import volume of natural rubber in 2024 has significantly decreased year-on-year, providing certain support for the domestic natural rubber market
In 2024, the operating rate of all steel tires remained relatively low compared to the same period last year, but the inventory of all steel tires gradually decreased in the second half of the year and the operating rate steadily increased. In 2024, the operating rate of semi steel tires remained relatively high year-on-year, and downstream passenger car sales continued to improve. The inventory of semi steel tires has remained at a relatively low level. Although the production of all steel tires has a low demand for dragging rubber, the overall consumption of natural rubber in tire production is relatively high compared to the same period last year due to the sustained improvement in demand for semi steel tires.
Outlook for the Natural Rubber Market in 2025
The natural rubber production capacity of Asian rubber producing countries in 2024 is approximately 15.57 million tons. Based on the 7-year cutting of rubber trees, it is expected that the natural rubber production capacity will show a slight decline after peaking in the later stage. It is estimated that by 2030, the natural rubber production capacity of Asian rubber producing countries will decline to 13.02 million tons, which is a compound annual decrease of about 3.0% compared to 2024. At the current high prices, Indonesia's production is expected to significantly decline by 2025, while regions with relatively young tree age structures such as Thailand, Vietnam, and Cote d'Ivoire are expected to see an increase in production. However, overall, natural rubber production is expected to peak.
The demand for new car tires and the market demand for replacement tires are expected to improve
On the one hand, the global resident car stock will maintain a growth trend from 2023 to 2025; On the other hand, in the past 2024, the global share of cheap tires in Asia has increased. Overall, the improvement of global residents' consumption ability and the shift in their consumption habits towards choosing Asian tires with higher cost-effectiveness are expected to further open up the potential demand space for the replacement tire market. The demand for replacement tires is expected to continue to grow in 2025
According to data from the China Association of Automobile Manufacturers, from January to November 2024, the production and sales of automobiles reached 27.903 million and 27.94 million respectively, an increase of 2.9% and 3.7% year-on-year. From January to November, the production and sales of new energy vehicles reached 11.345 million and 11.262 million respectively, an increase of 34.6% and 35.6% year-on-year; The sales of new energy vehicles account for 40.3% of the total sales of new cars. The downstream demand for automobiles is expected to improve in 2025, especially for new energy vehicles. Encouraged by relevant domestic policies, it is expected that demand will continue to steadily increase.
The disturbance of weather factors in 2025 will have a certain impact on the natural rubber market
It is expected that under normal weather conditions in 2025, global natural rubber production will slightly increase, and the global supply-demand gap may narrow; If the weather is abnormal, global natural rubber production will be somewhat hindered, and the global supply-demand gap will slightly widen.
Taking into account factors such as the basic peak of supply and the expected increase in demand, the natural rubber market is expected to remain at a high level in 2025. Coupled with weather factors, the natural rubber market is expected to fluctuate within a high range in 2025.
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