Natural Rubber Prices Continue to Rise – What It Means for the Global Tyre Industry

Natural rubber remains one of the most critical raw materials used in tyre manufacturing, accounting for approximately 30–50% of the raw material content of a typical passenger car tyre and an even higher proportion in truck, bus and off-the-road (OTR) tyres. As global rubber prices continue to rise throughout 2026, tyre manufacturers are once again facing significant cost pressure.

Global demand continues to outpace supply

According to the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber production is forecast to reach 15.324 million tonnes in 2026, while worldwide consumption is expected to reach 15.602 million tonnes. This represents a supply deficit of approximately 278,000 tonnes, with several market analysts estimating that the actual shortfall could approach 400,000 tonnes if weather-related disruptions continue.

The imbalance marks another consecutive year in which global demand exceeds production, keeping upward pressure on prices.

Southeast Asia dominates global production

Around 90% of the world's natural rubber is produced in Asia. The largest producing countries are:

• Thailand: approximately 4.8 million tonnes per year

• Indonesia: approximately 3.1 million tonnes

• Vietnam: approximately 1.3 million tonnes

• India: approximately 900,000 tonnes

• China: approximately 800,000 tonnes

Production in several regions has been affected by prolonged rainfall, changing weather patterns and outbreaks of leaf diseases, reducing latex harvesting and tightening global supply.

The tyre industry consumes the vast majority of natural rubber

The tyre industry is by far the largest consumer of natural rubber, accounting for approximately 70% of global natural rubber demand.

Natural rubber remains indispensable because it offers:

• superior fatigue resistance,

• excellent tear strength,

• low heat build-up,

• high durability under heavy loads.

These properties make it particularly important for truck, bus, aviation, mining and industrial tyres, where synthetic alternatives cannot fully replace it.

Raw materials represent a major cost factor

Raw materials typically account for 40–50% of the manufacturing cost of a tyre. Natural rubber alone often represents 20–30% of total production costs, depending on tyre type and manufacturer.

When natural rubber prices rise significantly, tyre manufacturers have limited options:

• absorb the higher costs,

• improve manufacturing efficiency,

• optimise product mix,

• or increase tyre prices.

Manufacturers are already warning of higher costs

Several leading tyre manufacturers have recently highlighted increasing raw material costs.

Continental stated during its latest quarterly results that the favourable raw material environment seen during the first half of 2026 is expected to reverse in the second half of the year. Despite maintaining its earnings guidance, the company expects significantly higher expenses for natural rubber and other raw materials.

Other global manufacturers including Michelin, Bridgestone, Goodyear and Yokohama have also identified raw material inflation as one of the key challenges for maintaining margins over the coming quarters.

Sustainability adds another layer of complexity

Beyond supply constraints, manufacturers are increasingly investing in sustainable sourcing initiatives.

Today, more than 85% of the world's natural rubber is produced by smallholder farmers, making traceability and responsible sourcing particularly challenging. New regulations, including the EU Deforestation Regulation (EUDR), require greater transparency throughout the supply chain and are expected to increase compliance costs across the industry.

At the same time, tyre manufacturers continue investing in alternative raw materials such as:

• Russian dandelion rubber (Taraxacum kok-saghyz),

• guayule natural rubber,

• recycled rubber compounds,

• bio-based synthetic elastomers.

Outlook

While global vehicle production remains relatively stable, demand for premium tyres, electric vehicles and commercial transport tyres continues to grow. Unless production conditions improve significantly in Southeast Asia, natural rubber is expected to remain one of the most closely watched commodities in the tyre industry throughout the remainder of 2026.

For tyre manufacturers, the challenge is no longer simply securing supply—it is balancing cost competitiveness, sustainability requirements and long-term raw material security in an increasingly volatile global market.