On May 26, the 18th Shanghai Derivatives Market Forum, hosted by the Shanghai Futures Exchange, opened at the Shanghai Futures Building. At the forum’s rubber-themed roundtable held that afternoon, participants engaged in an in-depth discussion on several challenges currently facing the international rubber market.

　　Although, amid robust supply and demand in both domestic and international markets this year, the consensus is that rubber prices will likely remain elevated for the remainder of the year, from a longer-term perspective, both domestic and overseas natural rubber supplies face certain challenges that warrant continued monitoring.

　　According to Salvatore Pinizzotto, Secretary-General of the International Rubber Study Group (IRSG), the major producers of natural rubber are currently concentrated in Southeast Asia, with Thailand and Indonesia accounting for 56% of global natural rubber output. However, Li Hong, General Manager of Shanghai Shidong Trading, told reporters that over the past two years, the Thai economy has continued to decline under the impact of the COVID‑19 pandemic, leading to a sharp reduction in bank lending to the rubber sector. Moreover, with a recent resurgence of COVID‑19 cases in Thailand—and the discovery of an Indian variant among infected individuals—some regions have implemented strict lockdown measures. All of these factors are expected to exert a certain degree of influence on natural rubber production in the coming years.

　　In addition, Li Hong believes that relevant companies should pay closer attention to Thailand’s previously enacted policy legalizing cannabis cultivation. “Although this policy is unlikely to affect local natural rubber production in the short term, given that cannabis cultivation can yield significantly higher profits, it will inevitably impact local rubber farming over the long run.”

　　In fact, over the past two years, Thailand’s rubber output has declined due to low returns on rubber cultivation. Li Hong added that, compared with 5.14 million tons in 2018, Thailand’s natural rubber production fell to just 4.5 million tons in 2020—underscoring the sector’s poor investment returns and the reluctance of new capital to enter either planting or processing.

　　According to Wang Pei, Chairman and General Manager of Qingdao Quanmei Rubber Tire, the entire Southeast Asian region is facing a similar situation. In particular, over the past two years, amid trade tensions, many manufacturing firms have relocated to Southeast Asia, driving up land prices and labor wages in the region.

　　Under these circumstances, even though relevant companies have raised wages for tapping and plantation workers over the past two years, worker morale remains low. According to Salvatore Pinizzotto, not only are new investments in plantations steadily declining, but fewer and fewer young people and women are entering the rubber‑planting sector.

　　Although production in Africa and Latin America has been steadily increasing over the past two years, Wang Pei believes that the growth in these emerging regions will not offset the decline in output from the major producing areas, ultimately impacting the future supply-and-demand dynamics of the market.

　　As for the domestic market, it appears to be facing a similar situation. Li Qisheng, president of Hainan Natural Rubber Industry Group, noted when outlining the current state of Hainan’s rubber market that the province currently lacks a large-scale seedling‑production company, and private enterprises have refrained from planting new rubber trees over the past two years.