Material Insights · Understanding the Material World

Natural rubber and Styrene-butadiene rubber

Natural rubber and styrene-butadiene rubber split the world rubber market roughly in half and are bought by the same tyre makers, but they cannot be swapped freely: truck tyres need natural rubber, car treads lean on SBR. Natural rubber's price follows tree supply and weather, SBR's follows oil-based monomers, so the gap between them moves a lot while the substitution between them stays limited.

Natural rubber (commodity) and Styrene-butadiene rubber (chemical): 4 relationships.

How they are linked

1. Partial substitute

Substitution · Weak · Each can replace the other at the margin

Both are elastomers that can be blended in tyre and rubber goods compounds, so a wide price gap lets compounders shift a few points of the blend, but each brings properties the other lacks.

  • about 47% natural rubber share of world rubber use, 2021 (14.07 of 29.88 Mt)

World rubber use in 2021 was about 29.9 Mt, of which 14.1 Mt natural and 15.8 Mt synthetic. US price analysts note that tyre making permits only limited substitution, and that in tyres the two behave more like complements than substitutes. Switching is easier in general rubber goods than in tyres, where reformulating needs testing and approval.

Sources: US Bureau of Labor Statistics, Beyond the Numbers; European Rubber Journal

2. Same tyre makers, different tyres

Shared risk · Strong · Both sold mainly to tyre makers

Tyre makers are the main buyers of both, so demand rises and falls with vehicle output and replacement tyre sales; the blend differs by tyre type, with truck tyres using a much higher share of natural rubber.

  • about 16% and 30% natural and synthetic rubber in a passenger tyre, by weight
  • about 30% and 13% natural and synthetic rubber in a truck tyre, by weight

Australian estimates put natural rubber at about twice the synthetic content in truck tyres and about half in car tyres, and other estimates differ by maker. A shift in the market from trucks and buses to cars, or towards larger radial truck fleets, therefore changes the mix of demand between the two even when total tyre output is flat.

Sources: US Bureau of Labor Statistics, Beyond the Numbers; VicRoads (Department of Transport, Victoria)

3. Oil drives SBR costs

Cost and price · Asymmetric · Oil and monomer prices to SBR, then to the price gap

SBR is made from butadiene and styrene, which come from oil and gas processing, while natural rubber is tapped from trees, so oil moves SBR costs directly and natural rubber only indirectly.

  • 43.6% rise in the US natural rubber price index, November 2016 to February 2017
  • 16.6% rise in the US synthetic rubber index, December 2016 to March 2017

In late 2016 and early 2017 the US natural rubber index rose far faster than the synthetic index, which shows the ratio between them is not fixed. Cheap oil lowers SBR costs and can cap natural rubber prices at the margin; expensive oil does the reverse. Thailand supplied about 37% of world natural rubber at the time, so weather there can move the gap as much as oil does.

Sources: US Bureau of Labor Statistics, Beyond the Numbers

4. Price link: substitute

Cost and price · Medium · Both ways

Because buyers can shift blends a little and both track tyre demand, the two prices drift together over a year, even though month to month they react to different supply shocks.

  • 0.11 monthly change correlation
  • 0.46 12-month change correlation
  • 0.73 fitted elasticity

The SBR series on the site is a US producer price index, which smooths monthly moves, so the monthly link is weak. Over a year the shared tyre cycle shows through. The site's series show a lag of about two months.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. The two rubbers share a customer base far more than they compete: tyre demand moves both, while their supply shocks are unrelated.
  2. SBR margins depend on butadiene and styrene costs against tyre demand; natural rubber prices depend on Southeast Asian weather and tapping, so the spread between them is a poor guide to switching.
  3. A tyre maker's exposure to each depends on its mix: truck and bus tyre makers carry more natural rubber risk, car tyre makers more SBR and oil risk.

What to track

  • Natural rubber price (TSR20, RSS3) against SBR 1502 price: A widening gap tests the limited switching in rubber goods and treads (Weekly · SGX, Rubber Board, industry price reports)
  • Butadiene price in Asia: Rising butadiene lifts SBR costs and supports natural rubber at the margin (Weekly · industry price reports)
  • Tyre production and replacement sales: Drive demand for both rubbers together (Monthly · ATMA, ETRMA, USTMA)

For policymakers

Key learnings

  1. India's natural rubber output covered only about 60% of its use in 2024-25, so tyre makers rely on imported natural rubber as well as synthetic rubber.
  2. Because substitution is limited, tariffs or duties on one rubber raise tyre costs rather than pushing buyers fully to the other.
  3. Plantation expansion schemes reduce import dependence for natural rubber, but SBR supply depends on petrochemical capacity and trade policy.

What to track

  • India natural rubber production, consumption and imports: A wider gap raises import dependence for tyre makers (Monthly · Rubber Board)
  • Trade remedy actions on synthetic rubber: Duties raise domestic SBR prices and tyre costs (As notified · DGTR, Ministry of Finance)

India

India used about 1.41 Mt of natural rubber in 2024-25 but produced about 0.88 Mt, so tyre makers import the balance. A Rubber Board project with the tyre makers' association ATMA aims to plant 200,000 hectares in the North East, and about 151,000 hectares had been planted by August 2025.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Why the prices of natural and synthetic rubber do not always bounce together, US Bureau of Labor Statistics, Beyond the Numbers
  3. IRSG expects rubber demand to grow 2.4% through to 2030, European Rubber Journal (2022)
  4. Technical Report TR 216: literature review on the use of passenger vehicle tyres in bitumen, VicRoads (Department of Transport, Victoria)
  5. Lok Sabha unstarred question 2649 on natural rubber, Parliament of India (Ministry of Commerce and Industry reply)