Natural Rubber Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Every organization and its procurement team look forward to negotiating the best deal when procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team get the optimum rate.

Geographical location, supply chain dynamics, weather conditions, transportation, and labor availability play a vital factor in analyzing the rate benchmarking of the natural rubber industry. For instance, the location of rubber plantations will impact not only the transportation costs but proximity to the markets and will be vulnerable to weather conditions. In areas close to transportation hubs or ports, shipping costs may be lower for rubber plants, whereas those in remote areas might incur higher transport costs. Further, regions that have favorable climates for rubber cultivation may be more productive and less expensive to grow.

The production and cultivation of rubber can also be affected by weather conditions. This can involve changes in temperature, rainfall patterns, and the frequency of natural disasters like storms and droughts. The more effort or resources required to implement mitigation measures will hamper harvesting schedules, resulting in lower yields and increased production costs. For instance, in April 2024, Vietnam and China continued to face natural rubber manufacturing problems. Vietnam's production zones were yet to begin harvesting, while China's drought-related concerns hampered rubber-cutting efforts. As a result, natural rubber prices increased in April 2024.

On the other hand, in India, due to the scarcity of natural rubber in the global market, prices between March and May 2024 reached a record peak of USD 2.40 per kg. In India, almost 70% of natural rubber consumption comes from the tire industry. These record steep prices of raw materials bumped up their production costs. Generally, RSS4 grade of natural rubber is used in the automobile industry, the prices of which reached USD 2.16 per kg in March 2024. Crude oil price increases also caused natural rubber prices to increase in India during this period. Red sea problems (or supply chain complexities) further caused delivery delays of Indian supplies to the West, thereby negatively impacting the tire exports from India. At the end of March 2024, the global rates of sheet rubber RSS3 increased by 50% since January 2024.

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Labor cost is one of the key components of the total cost incurred while offering a product or service. Therefore, an organization must decide whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, rubber collection project leaders in Indonesia and Malaysia earn, on average, around USD 3,000 - 6,000 annually. In India, the average salary is around USD 8,000 to 10,000 annually. However, the year-on-year increment rate in these positions majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to track all the latest developments in their supplier landscape continuously. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the natural rubber industry in 2024:

• In May 2024, Vietnam Rubber Group (VRG) announced it would continue to promote sustainability with a goal that 60% of its rubber area will be certified for sustainable forest management by 2030. The company also aims to achieve international sustainability certifications like VFSC, PEFC, and FSC by 2030. By implementing eco-friendly production methods, VRG minimizes waste and emissions throughout the entire supply chain.

• In March 2024, Sri Trang Group announced the launch of its new product “Traceable Natural Rubber (GPS).” The clients (or, end-use companies) will be able to 100% trace back the origin of all the natural rubber products under this product portfolio. Sri Trang has started providing EUDR-compliant rubber from May 2024 onwards to major tire manufacturers in Europe, China, South Korea and other countries. Sri Trang is fully equipped to provide all forms of EUDR rubber, such as rubber blocks, latex concentrates, rubber sheets, etc.

• In July 2023, Pirelli acquired Hevea-Tec, the largest independent natural rubber processing company in Brazil. Through this acquisition, Pirelli aims to boost its natural rubber supply in the LATAM region. In order to meet the company's goals, Pirelli will be able to launch natural rubber projects and increase the use of non-fossil-based materials in tires.