IRSG warns about global rubber oversupply

(Crain News Service photo)
Stephen Evans, secretary general of the International Rubber Study Group

By Jane Ho, Crain News Service

GUANGDONG, China (April 13, 2015) — The global rubber industry is facing a troubling rubber oversupply situation, for both natural (NR) and synthetic rubber (SR), according to Stephen Evans, secretary general of the International Rubber Study Group (IRSG).

Speaking at the 2015 China Rubber Conference in Guangzhou, Mr. Evans said the natural and synethetic rubber surpluses could reach 1 million and 3 million metric tons, respectively, by 2020.

Lack of economic growth is one reason for the underconsumption,” Mr. Evans said. “Recovery from the financial crisis has not fully happened.”

Global consumption of NR and SR, pegged at 12.3 million and 16.8 million tons respectively in 2015 — up 3.1 percent and 0.9 percent from 2014 — is projected to reach 15 million and 19.4 million tons in 2020, or 4.4- and 3.1-percent annual growth.

“If crude oil prices stayed down, it would add some stimulus,” he added, “increasing global rubber consumption by 500,000 tons in 2020.”

Mr. Evans also raised concerns about upstream and downstream challenges. For producers, those challenges include adequate financial reward for farmers and a lack of inward investment for NR, as well as inadequate competitive chemical feedstock supply and bio-sourcing for synthetic rubber.

Problems facing consumers include stable prices, raw material recovery from end-of-life rubber products, and legislation to encourage innovation ability down the value chain.

Besides capacity and planted area expansion, Mr. Evans said he believes excess NR inventory in both producing and consuming countries has an impact on the industry in the shorter term, while longer-term factors include recycling, shale gas access in China, climate change and competition for labor and land in Southeast Asia poses.

Mr. Evans also said he believes that with limited local NR supply in major consumer countries — China and India — and new SR capacity expansions in both countries, synthetic rubber may become the strategic product of choice.

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Jane Ho is a correspondent for European Rubber Journal, a U.K.-based sister publication of Tire Business.

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