Rubber Trading Guide: Natural vs Synthetic

Global natural rubber production averages approximately 14 million tonnes annually, with Thailand (~35%), Indonesia (~25%), and Vietnam (~8%) as the dominant producers. Southeast Asia accounts for over 85% of global natural rubber supply, creating significant regional concentration. The tire industry consumes roughly 70% of natural rubber, with the remainder going to industrial products, gloves, and other latex goods.

Natural rubber competes with synthetic rubber (produced from petroleum), but natural rubber's superior elasticity, heat resistance, and tensile strength make it irreplaceable for heavy-duty applications like truck tires, aircraft tires, and industrial belts.

Technically Specified Rubber (TSR) is the dominant form in international trade — grades like TSR 20 (Thailand's STR 20, Indonesia's SIR 20) are specified by dirt content, ash, nitrogen, and other technical parameters. Ribbed Smoked Sheets (RSS) are graded visually (RSS 1 through RSS 5) and are the traditional form, still important in certain markets.

Concentrated latex (60% DRC — dry rubber content) is used for dipped products (gloves, condoms, balloons). Field latex from rubber trees is either processed into TSR/RSS at factories or concentrated for the latex products industry. Each product has distinct quality requirements and pricing.

The SICOM (Singapore Commodity Exchange, part of SGX) TSR 20 futures contract is the primary benchmark for physical rubber trading. TOCOM (Tokyo Commodity Exchange) RSS 3 futures is another important reference. Shanghai Futures Exchange (SHFE) rubber futures reflect Chinese domestic pricing. Physical rubber trades at premiums or discounts to these benchmarks based on grade, origin, and delivery period.

Rubber prices are influenced by crude oil prices (which affect synthetic rubber costs and thus substitution economics), Chinese automotive demand, seasonal tapping patterns (lower output during wintering season from February to April), and currency movements in producing countries.