Rubber Authority Deploys Active Market Management Strategy to Build Stability, Expects Strong Price Momentum in Second Half
Thailand's Rubber Authority is implementing active market management to sustain price gains, with Grade 3 ribbed smoked sheets hitting a decade-high of 89.50 baht per kilogram in May amid tight global supply and strong international demand.
The Rubber Authority of Thailand is rolling out an aggressive market management strategy to create price stability and push Thai rubber prices to new highs. Kosol Bunkhong, acting Governor of the Rubber Authority of Thailand (RTA), revealed that rubber prices showed consistent improvement throughout the first half of 2025. Grade 3 ribbed smoked sheets rose from an average of 60.51 baht per kilogram in January to a peak of 89.50 baht per kilogram in May, while latex rose from 56.92 baht to 86.50 baht per kilogram during the same period—marking the highest price increase in a decade.
Several factors are driving these gains. Strong global demand for natural rubber remains elevated, with the Association of Natural Rubber Producing Countries (ANRPC) predicting sustained strength in world markets. Global demand for natural rubber in 2025 is projected at approximately 15.60 million tons, while production stands at about 15.32 million tons, creating a supply shortage of roughly 280,000 tons. This demand-supply imbalance supports continued price growth, and Thailand remains the world's largest natural rubber producer with output of approximately 4.85 million tons.
Geopolitical tensions in the Middle East have also contributed to higher prices by pushing up crude oil costs and consequently synthetic rubber prices. Since synthetic rubber derives from petroleum, increased crude prices make it more expensive, prompting tire manufacturers and other industries—particularly in China and Europe—to shift toward cheaper natural rubber. Additionally, the weakened Thai baht relative to the US dollar enhances Thailand's competitive advantage in the global market.
During the second half of 2025, as the region transitions from the dry season to the rainy season and rubber trees flush with new leaves, farmers will begin tapping trees more frequently, which could affect prices somewhat. However, sustained international demand to replenish depleted stocks and potential weather impacts that could reduce output are expected to maintain market balance and support prices at appropriate levels.
The RTA is employing an active market management strategy to stabilize conditions and maximize Thai rubber prices. This includes holding back portions of farmer production through storage and deploying 80% of the value in rotating credit to maintain liquidity, with strategic sales timed for peak prices through RTA-controlled distribution channels.
