Oil price transmission, synthetic-rubber substitution, and inventory regimes in China-Thailand rubber markets

This paper examines how international crude-oil price movements are transmitted to natural-rubber prices through the petrochemical-synthetic-rubber chain, with implications for Thailand as the world's leading natural-rubber exporter and China as the dominant consumer. Using monthly data from April 2003 to March 2026 on the OPEC reference basket, butadiene, styrene-butadiene rubber (SBR), and the Shanghai natural-rubber benchmark, the analysis combines a nonlinear ARDL specification with a Pesaran-Shin-Smith bounds test, a long-run association decomposition into direct and synthetic-rubber-mediated components with bootstrap inference, and a threshold-NARDL extension that conditions the decomposition on the inventory state. Three findings stand out. First, the synthetic-rubber-mediated component accounts for approximately three-quarters of the estimated oil-natural rubber long-run association (73.5 percent, 95 percent bootstrap CI [60.6, 87.2]), with the residual direct component accounting for the remainder. Second, long-run pass-through is directionally consistent with concentration in the synthetic-rubber component, although Wald tests do not reject symmetry at conventional levels for either the synthetic-rubber component (Wald p=0.135) or the direct oil component (p=0.166). Third, the synthetic-rubber-mediated share is consistently larger in low-inventory regimes by 26 to 66 percentage points across three alternative regime variables, although the magnitude amplification of asymmetric pass-through itself is not robust. Asymmetric local projections and a Diebold-Yilmaz spillover analysis are reported as complementary horizon-indexed and network checks. The results imply that the synthetic-natural rubber spread, conditioned on the inventory state, may be more informative for natural-rubber price-risk monitoring than crude-oil prices alone. These findings have implications for commodity price-risk monitoring, export-income exposure, and stabilisation design in rubber-exporting economies. Because crude-oil shocks are not externally identified, all estimates are interpreted as decompositions of long-run association rather than causal mediation effects.