Global Rubber Industry Faces Fifth Consecutive Year of Supply Shortages Amid Surging Demand

March 25, 2025

The global rubber industry is grappling with a prolonged supply-demand imbalance, as highlighted by recent reports from the Association of Natural Rubber Producing Countries (ANRPC). For the fifth consecutive year, natural rubber production is projected to fall short of consumption, with a supply deficit of approximately 700,000 tons in 2025. This persistent gap is driven by sluggish output growth (0.3% to 14.9 million tons) and robust demand growth (1.8% to 15.6 million tons), fueled by rising needs in automotive and industrial sectors45.

Key Drivers of the Crisis

Production Challenges in Major Exporting Nations

Indonesia and Vietnam, key producers, face declining yields due to aging rubber trees and farmers shifting to more profitable crops like oil palm and coffee. Indonesia’s 2025 output is expected to drop 9.8%, while Vietnam’s production may dip 1.3%4.

Thailand, the top producer, anticipates only a 1.2% output increase despite recent price rebounds. Extreme weather, including thunderstorms in southern Thailand, further threatens harvests5.

Surging Demand from China and India:

China, the largest consumer, is projected to increase natural rubber imports by 2.5%, driven by its expanding automotive sector, particularly electric vehicles (EVs). India’s demand is set to rise 3.4%, supported by infrastructure and tire manufacturing growth46.

Market and Policy Responses

Price Volatility: Rubber futures hit 205 cents/kg in early March, nearing 13-year highs. Tire manufacturers, already burdened by elevated costs, may face further price pressures5.

Sustainability and Trade Barriers: The EU’s stringent deforestation-linked regulations (EUDR) and Digital Product Passports (DPP) are complicating exports from small Southeast Asian farmers, potentially redirecting import pressures to China12.

China’s Domestic Innovations:

Breakthroughs in green tire technology, such as Qingdao University’s energy-efficient extrusion systems, and Sinopec’s 5,000-ton/year liquid rubber production line, aim to reduce import reliance12.

China’s first large-scale civil aviation tire production line, operational since November 2024 in Guangxi, has ended foreign monopolies in aviation tires3.

Regional Collaborations and Sustainability Initiatives

China-Africa partnerships, like Hainan Rubber’s推广 of advanced tapping techniques in Cameroon, aim to reduce tree damage by 30%2.

Bridgestone and the Pacific Northwest National Laboratory (PNNL) are advancing ethanol-to-butadiene technology to recycle waste tires, aligning with circular economy goals2.

Outlook
Industry analysts warn that prolonged shortages could reshape global supply chains, with synthetic rubber (boosted by EV demand) and strategic stockpiling playing larger roles. Meanwhile, China’s push for self-reliance through tech upgrades and ASEAN partnerships may mitigate risks