Global supplies are already low.
China’s stockpiling and a leaf disease are part of the issue.
Rubber prices are already on the rise.
Congested shipping lines, a disease, and stockpiling are creating a scenario that could see important rubber shortages the world over. Already, rubber prices are on the rise which, when all combined, could force automotive assembly lines and tire factories to idle.
There’s much going on in this story. Natural rubber-producing countries such as Thailand and Vietnam are facing several issues starting with persistently low prices. This has pushed farmers to tap more trees often without planting new trees. The trouble here is that the trees need seven years to mature before they can produce viable sap. Demand for the material has increased for the material during the pandemic and while prices were still low, China made substantial purchases.
The dwindling supplies are also the result of tire companies buying rubber. Combined with various other complications as stated above, prices are expected to soar before long. Currently, according to Automotive News, a kilogram of natural rubber sells for about $2, a four-year high, and could reach as high as $5 within the next five years.
Robert Meyer, the former CEO of rubber giant Halcyon Agri Corp., said: “The supply issues that we’re seeing now, they are structural,” who is now a managing director with venture firm Angsana Investments Private Ltd. in Singapore. “They will not change very soon.”