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The Thai rubber industry can look forward to improving business conditions over the period 2021-2023, during which stronger demand for rubber will be underpinned by growth in downstream industries including tire manufacturing and medical supplies, especially latex gloves. In addition, an acceleration of work on public-sector infrastructure will also boost demand for rubber products for use in the construction sector. However, exports will present a mixed picture. While Thai producers of RSS and TSR will struggle against rising output from the CLMV region, where Chinese players have been investing in both rubber plantations and processing facilities, strong growth in overseas demand for concentrated latex, and compound and mixed rubber will present new opportunities for Thai manufacturers.

1/ The Thai rubber industry consists of 1) the Upstream rubber industry, which refers to rubber farmers who cultivate natural rubber (NR), tap fresh latex, and in some cases, perform primary processing into dry rubber forms (such as cup lump, rubber scrap, unsmoked rubber sheet, and crepe rubber), where almost all of Thailand's upstream rubber output is used as raw material for the domestic intermediate rubber industry; 2) the Intermediate rubber industry, or processed rubber industry, which involves taking upstream rubber products from farmers and processing them into intermediate rubber products, such as ribbed smoked sheets (RSS), technically specified rubber (TSR), concentrated latex, compound rubber, and mixtures with characteristics and properties suitable as raw materials for downstream rubber product manufacturing; and 3) the Downstream rubber industry, or rubber product industry, such as tires, rubber gloves, condoms, and elastic thread, in which certain types of downstream rubber production may utilize synthetic rubber (SR), a petrochemical product, as a co-raw material to achieve properties appropriate for manufacturing each specific type of downstream rubber product. 2/ This comprises rubber sheets, technically specified rubber (TSR), concentrated latex, compound rubber, and mixtures, as assessed by the export value of natural rubber and the value of natural rubber consumed domestically. 3/ Calculated based on dry rubber content (DRC) only, excluding water and other chemical mixtures. 4/ Other products cover industrial rubber products, machine parts, and general consumer goods, which are categories characterized by high demand elasticity. When the global economy slows down, the manufacturing sector and purchasing power within the luxury and non-essential goods segments are the first to experience a decline. 5/ Elastic thread is primarily utilized within the apparel and textile industries. 6/ The rubber product weight measured at customs checkpoints, when calculated specifically for dry rubber content (DRC), totals 3.3 million tonnes. This is based on an average DRC for concentrated latex of 60.0%, while the average DRC for compound rubber and mixed rubber ranges between 80.0-95.0%. 7/The export of HS Codes 4001 and 4002 via the Mekong River route decreased from 20.0% to 0.0%, which enhanced Thailand's competitiveness to a level comparable with the CLMV group. 8/The HS Codes consist of 4001, 4005, and 400280. 9/Assuming no permanent felling of rubber trees and a lack of cooperation in supply reduction among major Asian rubber-producing nations. 10/ According to the National Oceanic and Atmospheric Administration (NOAA), the most recent El Niño occurred during 2023-2024, resulting in a relatively high probability of La Niña during 2025-2026. Krungsri Research expects this condition to persist for 1-2 years, after which weather conditions are likely to return to neutral, with a projected transition back to El Niño in 2027-2028. 11/ This is a result of government schemes that ran over 2003-2013 that had the goal of expanding the total area of rubber plantations by 1 million rai. 12/ Generally, rubber trees begin to provide high and consistent latex yields when they reach 10-20 years of age. 13/ Having first emerged in Thailand in 2019 and persisting through 2023, outbreaks of rubber leaf fall disease involve both existing and emerging strains and can be found across all cultivated rubber varieties. The disease is difficult to control and eradicate, with current strains identified as either Pestalotiopsis sp. or Colletotrichum sp. fungi. Transmission occurs via wind and rain, as well as through the movement of saplings or planting materials from infected plots. This results in stunted tree growth and leads to a significant reduction in production volume of approximately 30.0-50.0%. 14/ Thailand is currently categorized within the low-risk group of countries. Regarding enforcement, the implementation date has been rescheduled to December 30, 2026, while for small and medium-sized enterprises (SMEs), enforcement is expected to commence around June 2027. 15/ The European Union Corporate Sustainability Due Diligence Directive (CSDDD) will begin enforcement for large companies (with more than 5,000 employees and global revenue exceeding EUR 1,500mn) starting July 26, 2027, with full implementation expected by July 26, 2029. 16/ Adaptation guidelines following ESG and SDG trends in the Thai rubber industry include the Environmental pillar, where operators focus on eco-friendly production by utilizing energy and water efficiently, maintaining standard wastewater treatment and odor filtration systems, and implementing waste segregation across the entire supply chain while restoring nature through reforestation and green space creation. Regarding the Social pillar, operators enhance quality of life and safety standards by complying with occupational health laws, emphasizing community engagement through local employment, supporting education, and providing disaster relief assistance. For the Governance pillar, operators establish policies rooted in procurement transparency and information disclosure, ensuring equal treatment of labor, fostering strong customer relationships, and instituting anti-corruption regulations in all forms within the organization. 17/ The rising prices of chemicals used in processing raw rubber and smoked rubber sheets have impacted farmers' costs, leading some to reduce fertilizer application for rubber trees. Consequently, the dry rubber content (DRC) of fresh latex has declined from 30-35% and may drop to 25-29%.

The Thai rubber industry can look forward to growth on both the demand and supply sides of the market over the three years from 2025 to 2027. Supply will benefit from the onset of La Niña conditions and the positive impacts of this on outputs, the expansion in the total size of rubber plantations,

Over 2023 and 2024, the expectation is that the industry will continue to grow, helped further by strengthening demand from downstream industries including auto production (partly due to stronger investment in electric vehicles resulting from government incentives), the production of latex gloves and medical devices, and the construction sector, where plans for an increase in spending on infrastructure will also feed into higher demand for rubber. In addition, government policy that aims to keep prices stable will help to maintain stability across the industry. Nevertheless, the industry will remain exposed to risk arising from greater competition from growers in the CLMV nations, which may be able to rapidly steal market share, and from the tightening of non-tariff barriers (NTBs) to trade.

Output by the Thai rubber sector is forecast to slide through the period 2019-2021 as producers confront the problem of declining demand in export markets

The rubber industry will benefit from an improving business environment through the period 2023 to 2025 thanks to both rising outputs and firmer demand. On the supply side, players will enjoy an expansion in the total size of rubber plantations, what is expected to be more favorable climate, and the incentive effects of higher prices on the care and upkeep of rubber stands, all of which will translate into greater output. At the same time, supply from Indonesia and Malaysia will struggle to recover fully from problems with labor shortages and the effects of leaf drop disease.

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