Prices recover strongly as supply tightens

After a prolonged lull, natural rubber has entered a new recovery phase. The TSR20 contract on the Singapore Exchange (SGX) for March 2026 delivery is trading around 200 U.S. cents per kg, up 25-30% from the 150-160 U.S. cents/kg bottom seen in mid-2025.

Liquidity has improved markedly since late Q4/2025 and remained strong into early 2026, signaling renewed capital inflows into rubber commodities.

Following the Lunar New Year holiday, rubber futures in Japan and China climbed at least 6% in the first trading week. According to CITIC Securities Futures, supply is currently constrained due to the annual leaf-shedding season, when latex output declines sharply.

With demand expected to rise, price movements will depend largely on winter inventory drawdowns and tire manufacturers’ operating rates.

Vietnam reflects similar tightening dynamics. According to Vietnam Customs data, rubber exports in 2025 reached 1.91 million tons worth nearly $3.33 billion, down 5.1% in volume and 2.6% in value year-on-year. Vietnam was among the few major producers to report a decline in export volume.

Part of the reason lies in stronger domestic demand, as Chinese tire makers such as Sailun Group, Guizhou Tyre, and Haohua Tire have invested in factories in Vietnam. In addition, some local rubber companies have deliberately curtailed sales volumes for different reasons.

Higher prices, but not higher volumes

Despite improved earnings across the sector, much of the growth did not stem purely from core latex operations.

At Ho Chi Minh City-based Phuoc Hoa Rubber Joint Stock Company (HoSE: PHR), parent-company latex output in 2025 reached 12,805 tons, slightly up from 12,771 tons a year earlier. However, purchased rubber volume fell sharply to 7,377 tons from 10,355 tons, leading to a significant drop in total sales volume.

Nevertheless, thanks to higher selling prices and a VND93 billion ($3.57 million) inventory reduction, consolidated net revenue rose by VND161 billion to VND1,794 billion ($68.88 million). Pre-tax profit reached VND630 billion ($24.19 million), up 16% year-on-year.

Notably, a substantial portion of profit growth came from non-core income. Other income totaled over VND138 billion ($5.3 million), compared with VND79 billion the previous year.

This included nearly VND8 billion in compensation for land clearance related to the Ho Chi Minh City-Chon Thanh Expressway and VND120 billion from compensation tied to the VSIP 3 Industrial Park project in the former Binh Duong province (now part of HCMC).

A total of 681 hectares of PHR land were recovered for the VSIP 3 project. As urbanization accelerates and industrial parks expand, plantation area reductions may continue, potentially constraining future latex output.

Similarly, Dong Phu Rubber Joint Stock Company (HoSE: DPR), based in the former Binh Phuoc province (now part of Dong Nai province) recorded a slight decline in sale volume in 2025 to 11,608 tons, down 2.7% from 2024. However, the average selling price increased from roughly VND48 million ($1,843) per ton to VND50.7 million per ton, lifting annual revenue by about 3%.

While harvesting output remains relatively stable, more plantations are entering the late stage of their lifecycle. DPR’s 2025 consolidated revenue edged down to VND1,188 billion from VND1,224 billion ($47 million), yet pre-tax profit surged 22% to VND459 billion ($17.62 million).

The primary driver was rubber tree liquidation. Latex sales generated VND939 billion ($36 million) in revenue with VND285 billion in gross profit. Meanwhile, rubber tree sales contributed VND158 billion in revenue with VND150 billion in gross profit - an extraordinary margin of roughly 95%.

While such activities bolster short-term profitability, extensive plantation liquidation may weigh on future latex production, especially if high rubber prices persist.

Replanting and expansion: Long-term strategic bets

Amid tightening latex supply both domestically and globally, companies that expanded plantation areas at the right time stand to benefit. However, rubber trees require 5-6 years before commercial tapping, meaning investments must be made well in advance.

Tay Ninh Rubber Joint Stock Company (HoSE: TRC), located in Tay Ninh province, has significantly increased its exploitable plantation area. As of Q4/2025, the company added VND524 billion ($20.12 million) in the cost of productive plantations to tangible fixed assets - a nearly 48% increase from the beginning of the year.

The remaining book value of productive plantations stood at VND1,367 billion ($52.49 million), with another VND153 billion recorded under long-term construction in progress, indicating a strong pipeline of future output capacity.

In 2025, TRC reported revenue of VND843 billion ($32.37 million) and pre-tax profit of VND285 billion. Earnings per share (EPS) reached VND8,669 ($0.33), up 14% year-on-year. If rubber prices remain elevated, earnings growth could be further reinforced as newly tapped plantations enter peak yield years.

PHR and DPR have also maintained replanting efforts. However, expansion carries risks. In Gia Lai province, of 32,371 hectares of forest land temporarily allocated for rubber projects, only 25,858 hectares have been planted. As of August 2025, over 17,651 hectares were recorded as dead, underdeveloped or ineffective.

This highlights the significant risks of expansion in new areas, including soil and climate conditions, and economic efficiency. Furthermore, rubber remains a highly cyclical commodity. Historically, the market has experienced sharp rallies followed by deep corrections once global supply improved or demand weakened.

The 2011-2014 period serves as a clear example: prices reached historic highs before entering a prolonged downturn that forced many producers to abandon rubber cultivation in favor of more profitable crops.