FOR weeks, the world's attention has been fixed on the chokepoint of the Strait of Hormuz. We've heard the grim forecasts: spiking oil prices, fertiliser shortages, and liquefied natural gas tankers idling at anchor.
But there is another, quieter victim of this Gulf skirmish, one that moves not in fiery pipelines but in the silent, steady rotation of a car tyre or the flex of a surgical glove.
The global rubber industry is about to be torn.
At first glance, rubber seems far removed from the sandbanks of the Gulf. Over 90 per cent of the world's natural rubber comes from the humid plantations of Southeast Asia — Thailand, Indonesia, Vietnam and Malaysia.
Not a single rubber tree grows near the conflict zone. So why should a skirmish 6,000 kilometres away cause a blowout in the rubber market?
The answer lies not in the growing, but in the getting there.
Rubber is a bulky, low-value-per-tonne commodity. The current restrictions on ship movements through the straits — whether from heightened insurance risks, naval patrols, or outright delays — are not just a local problem. They are a global logistics migraine.
Every day of delay in the Gulf sends ripples across the entire carrier scheduling network. Vessels that would normally carry Thai rubber to Rotterdam or Chinese manufactured tyres to Europe are being re-routed around the Cape of Good Hope, adding 10–14 days to each journey.
That ties up fleet capacity, reduces the number of available voyages per year, and — most critically — sends freight rates through the roof.
Spot container freight rates from Southeast Asia to Mediterranean ports have jumped in recent weeks, mirroring the spike in oil-driven bunker fuel costs.
For rubber shippers, this is a one-two knockout punch.
First, higher fuel surcharges. Second, a scramble for limited hull space as shipping lines prioritise higher-value goods like electronics or pharmaceuticals over ribbed smoked sheets or block rubber.
Then there is the matter of war risk insurance. Any vessel transiting the southern Red Sea or approaching the Gulf is now facing higher premiums.
And insurers, never fond of uncertainty, are adding clauses that exclude rerouting or delay coverage.
If a rubber-laden ship is held for inspection or waits out a threat, the cost of that idle time — demurrage — falls directly on the trader or buyer.
Consequently, many small and medium rubber traders are simply halting new shipments.
They cannot absorb the freight and insurance shock, and they cannot pass it all forward without killing demand.
This is creating a vacuum in the physical supply chain: rubber that has been harvested and processed in Sumatra is sitting in warehouses, while manufacturers in Europe, North America, and even China are starting to eye dwindling stocks.
So how will the world price of rubber respond? The short answer is with a sharp, jagged upward lurch, followed by extreme volatility.
The benchmark Tokyo Commodity Exchange (TOCOM) rubber futures have already climbed 18 per cent in the last fortnight, and that is likely just the opening salvo.
Why? Because unlike oil, rubber cannot be easily substituted in the short term. Yes, synthetic rubber exists — but it is made from crude oil derivatives (styrene, butadiene).
And oil prices are also spiking. The skirmish has thus created a rare double supply shock: natural rubber becomes expensive to ship, while synthetic rubber becomes expensive to produce.
Market watchers anticipate that within two months, global natural rubber prices will test earlier highs.
Not everyone loses equally. Large tyre multinationals with long-term supply contracts and diversified shipping arrangements will ride out the storm, albeit with thinner margins.
But the smallholder farmers, who produce nearly 85 per cent of the world's rubber, will see little of the price rise, as local middlemen will cite "logistical constraints" to keep farmgate prices depressed.
And the real pain will be felt by downstream manufacturers: medical glove factories in Malaysia, rubber parts makers in Germany, and retreaders in Brazil.
Their input costs are exploding just as consumer demand — already weakened by high oil and fertiliser prices — begins to buckle.
The skirmish in the Gulf is exposing the brittle, over-optimised nature of just-in-time commodity trade. For decades, the rubber industry assumed that ocean freight would remain cheap, predictable, and safe.
That era is now over for as long as the conflict lasts — and probably long after, as shippers permanently price in a "Gulf risk premium."
* The writer is a professor at the Tan Sri Omar Centre for STI Policy, UCSI University and Adjunct Professor, UAC, University Malaya
Source: NST