A beginner’s guide to rubber: Price, uses & market overview

By:

Prash Raval

Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.

Updated:  Aug 28, 2024

Listen

---

---

0:00 / 04:25

Ad disclosure

Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who may pay to be displayed in certain positions on certain pages, or may compensate us for referring users to their services. While our reviews and assessments of each product are independent and unbiased, the order in which brands are presented and the placement of offers may be impacted and some of the links on this page may be affiliate links from which we earn a commission. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >

5 min read

Trade your favourite markets with our top-rated broker, Plus500.

4.5/5

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Visit site

On this page, we explore everything you need to know about rubber. Gain insights into rubber market trends, pricing mechanisms, and the environmental impact of rubber. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in rubber. 

What is rubber?

Rubber is a versatile material that is durable, stretchy, and waterproof. Derived from the sap of rubber trees, over half of all rubber goes into the production of tyres thanks to its abrasion-resistant features. 

Rubber was first utilised over 4,000 years ago in South America. After vulcanisation was patented in the late 1800’s, rubber became a global commodity. Rubber plantations quickly spread across Southeast Asia causing much devastation to rainforests. 

Thanks to rising incomes and tremendous growth in vehicle sales, rubber demand has grown exponentially in recent years. Over 27 million metric tons were consumed in 2021 alone. Although best known for its use in tyres, rubber has many other uses including in earthquake-resistant buildings and medical goods. 

Rubber market overview

The futures market for rubber is relatively new and only emerged in the 1980s. Rubber is traded on several global exchanges like TOCOM, SICOM, and SGX. Due to its volatile price nature, these exchanges introduced benchmark contracts like TOCOM’s TSR20 which today is the price reference for rubber deals around the world. 

Rubber is produced globally, although major producers like Thailand, Indonesia, and Malaysia are key exporters in global trade. China, the U.S., and India are the world’s leading importers of rubber. Prices fluctuate daily and often sharply based on weather events, oil prices, economic conditions, and supply chain issues. 

Is rubber valuable? 

Yes, rubber is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

• Portfolio diversification. Most investors stick to assets like stocks and bonds. However, adding commodities to your portfolio can help diversify and lower risk when stock or bond markets are underperforming. Rubber usually acts differently to other asset classes and even other commodities.
• Hedge against inflation. All investors have to consider the impact inflation has on their portfolios. Inflation is when money loses value over time. One way to protect or ‘hedge’ against it, is by investing in commodities. Soft commodities like rubber tend to become more valuable when inflation rises. 
• Bet on the auto industry. Almost three-quarters of all rubber produced worldwide goes to manufacturing tires. Rubber is used for other auto parts too including bumpers, airbags, and mats among other things. As the auto industry continues to grow, especially in developing countries, demand for rubber will rise too. 
• Speculate on oil prices. There are two types of rubber; natural and synthetic. Natural rubber comes from trees. Synthetic rubber is produced using crude oil. If oil prices rise, the cost of producing synthetic rubber will increase. Natural rubber will also benefit from higher prices, as its demand will grow when synthetic becomes too expensive. 

How to invest in rubber

You can invest in rubber by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. 

Some let you buy rubber, others let you trade rubber, and many are designed for investing in the hard commodity. Visit our dedicated guide to discover how to invest in rubber.

Rubber in your investment portfolio

A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of rubber can add value while allowing you to spread your money across various markets. 

Rubber often moves independently to traditional investments like stocks and bonds. You can include rubber in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as rubber as attractive options. 

Rubber’s long history and the fact it is an essential commodity in the auto industry, make it a good long term play.

Rubber vs other commodities

Rubber is considered a hard commodity and falls into the same category as the likes of gold, silver, and platinum. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific commodities using our dedicated guides below. 

• Gold. Gold is a yellow metal and one of the most popular commodities in the world. 
• Silver. Often referred to as gold’s cousin, silver is a versatile commodity with multiple uses. 
• Platinum. Platinum is a precious metal commodity known for its rarity and value. 

FAQs