Natural Rubber

Natural rubber is tapped as latex from the Hevea brasiliensis tree, grown almost entirely in the tropics, with world output around 14 to 15 million tonnes a year. It competes against a larger synthetic-rubber market made from oil-derived butadiene and styrene, so its price is anchored to both Chinese industrial demand and crude oil. What keeps natural rubber irreplaceable is heat resistance: the high-load, high-temperature tires used on trucks, off-road equipment, and aircraft cannot be made from synthetic alone, so roughly 70 percent of all natural rubber goes into tires. That makes it an industrial soft commodity, rising and falling with auto production and the global freight cycle rather than with the weather alone. Supply is concentrated in Southeast Asia, with Thailand and Indonesia together producing more than half the world total, while Ivory Coast has risen quickly to become the largest African producer and one of the top sources overall.

The 2024 to 2026 period brought the tightest market in years. A fungal outbreak known as Pestalotiopsis leaf fall spread across Thailand and Indonesia, cutting yields by as much as 30 percent in affected regions, on top of aging trees whose productivity has slipped since the price slump of the 2010s discouraged replanting. The Association of Natural Rubber Producing Countries flagged a global deficit of roughly 400,000 tonnes for 2026, the latest in a run of deficit years, and benchmark prices climbed to around 230 cents per kilogram by mid-2026, near the highest since early 2017. Layered on top is the European Union Deforestation Regulation, whose compliance requirements reshaped sourcing and traceability for rubber from 2025, pushing buyers toward documented, deforestation-free supply.

Natural rubber reaches the market in two main grade families. Technically specified rubber, abbreviated TSR and also called block rubber, is the modern dominant form: latex and field coagulum machine-processed into compressed bales and graded to numerical technical specifications, of which TSR20 (largely field coagulum, destined for tires) is by far the most traded. Ribbed smoked sheet, abbreviated RSS, is the older artisanal form: sheets of coagulated latex air-dried over wood smoke and graded visually by appearance, from RSS1, the premium grade, down through RSS5. In practice RSS1 is the benchmark premium sheet grade quoted in the physical market, while RSS3 is the grade most futures contracts settle against. As a rule, TSR is the bulk industrial grade and RSS1 the high-quality sheet grade, and a cargo is almost always one or the other. Pricing is set across three Asian hubs: the Shanghai exchanges (SHFE and the INE international contract) carry the largest volume, including the TSR20 contract; the Osaka Exchange RSS3 contract is the historic global benchmark for ribbed smoked sheet; and Singapore's SGX SICOM is the physical Asian benchmark for both TSR20 and RSS3.