Green Tyres in Demand
By Sharad Matade
The global market for industrial fillers is expected to increase from $29.3 billion in 2014 to $36 billion in 2019, reflecting a compound annual growth rate (CAGR) of 4.2 per cent from 2014 to 2019, according to a research report, titled Industrial Fillers: Global Markets, published by BCC Research, a publisher of technology market research reports based in Wellesley, Massachussets.
Increased polymer production in the construction, automotive and packaging industries will drive growth in the global industrial fillers market. BCC Research reveals in its new report that carbon black is expected to have the highest growth prospects over the forecast period.
“At present, automotive accounts for the largest volume share of carbon black over 75 per cent. Addition of carbon black to rubbers drastically improves the reinforcement properties of the base material. Moreover, carbon black is a naturally occurring pigment, which when added to rubber products enhances the “blackness” of the product,” says Tanmay Joshi, analyst at BCC Research.
Silica is being aggressively adopted by tyre industry as a reinforcement material due to tightening safety and environmental norms. Car manufacturers are increasingly using silica based compounds as a substitute to carbon black. Silica offers a higher reinforcing ability and improves fuel efficiency, while carbon black has a higher rolling resistance, which results in higher consumption of fuel.
“Automobile manufacturers are constantly looking at innovative yet economic solutions to improve fuel efficiency. Higher fuel efficiency also results in reducing emissions, which further helps manufacturers to adhere to mandatory guidelines defined in Euro norms as well as Montreal Protocol and Kyoto Protocol,” says Joshi.
“Growing awareness regarding environment conservation is expected to result in a higher demand for “Green Tyres” in the immediate future and this factor is expected to sustain for a significant time period. Low resistance property of silica has resulted in substituting part or all of the carbon black in tyres,” adds the analyst.
Though there is a higher growth is expected in carbon black industry in future owing growing demand from tyre and other industries, there industry is facing some challenges too. “Carbon black is potentially dangerous to human health owing to its carcinogenic property. It is classified as Group 2B carcinogenic. Furthermore, substitution threat from other filler materials including silica and other silanes is expected to hamper market growth,” explains Joshi.
At a regional level, carbon black manufacturers in Europe are shifting their manufacturing bases to Central and Eastern Europe and Asia Pacific, owing to lower costs incurred during manufacturing. “Presence of well-established existing end-user industries in Europe is expected to result in logistic hurdles owing to transportation of the product to buyer,” says Joshi.
Along with these, volatile petroleum prices are expected to pose as a threat for the growth of the market. “Volatility in prices of petroleum results in impacting manufacturing costs, thereby affecting carbon black manufacturers’ profit margins. As it is unfeasible to constantly pass on the extra cost incurred during manufacturing, producers face heavy revenue loses, which may lead to eventual shutdown of facilities,” says Joshi.
“Increasing demand for specialty carbon black for improving colour, conductivity as well as viscosity along with excellent UV protection is expected to result in providing new opportunities for market growth,” adds Joshi.
However, there are some efforts being undertaken to make carbon black eco-friendly. For instance, Pyrolyx AG, a German-based company, specialising in practical and applied research in environmental technology, was granted patent (JP 2012-530134) in Japan in May 2015. “The company has developed a unique process that allows carbon black to be recovered from commercial rubber granules produced from end-of-life tyres,” says Joshi
Polymers exhibit numerous features superior to those of traditional materials such as glass, metal and wood. One of the primary features of polymers is lightweight, which makes them tremendously useful in the automotive industry. “Numerous companies are switching to polymers to reduce the overall weight of the vehicle, which helps in improving fuel efficiency. In addition, polymers allow for easy mouldability and higher durability. They also consume less space as compared to other materials,” says the BCC Research executive.
“Plastic composites are expected to witness the highest demand in the near future owing to their ability to blend with other materials. In addition, the ability of composites to bring out the best features of the base materials is expected to result in tremendous demand in the near future,” adds he.
According to Joshi, at present, Asia Pacific was the largest consumer of carbon black for tyre as well as non-tyre applications and Europe ranked second in terms of consumption, closely followed by North America.
“At a country scale, China dominated the global market and the trend is expected to continue over the next few years. Presence of large scale tyre manufacturing facilities in the region coupled with the presence of other non-tyre related industries that consume carbon black, is expected to result in high consumption in the region in the near future. Rapid industrialisation in emerging economies including China and India is expected to drive demand,” explains Joshi.
Talking about the impact on falling crude oil prices on carbon black demand- supply trend, Joshi says that rising demand for products such as carbon black in niche non-tyre applications like belts and hoses is expected to result in high demand for the product. “Although oil prices have witnessed a fall over the past few months, carbon black prices are not anticipated to plunge owing to complex technology for manufacturing, logistics, yield and rising energy prices. Moreover, companies have to mandatorily register to numerous regulatory agencies which adds to the cost of the final product. Thus, falling crude oil prices are expected to have little effect on carbon black,” says Joshi.
The derailing Chinese economy is likely to have a larger impact of global tyre companies’ business as the country is one of the largest market for tyres. The current economic situation in China may have some impact of the carbon black industry, but it is difficult to predict, according to Joshi. “As the situation in China is irregular at present, the impact of the economy on carbon black is unpredictable,” says Joshi.
Talking on consolidation in carbon black industry, Joshi thinks that the carbon black market is consolidated in nature with certain key players including Birla integrated across numerous stages of the value chain. “However, complex manufacturing technology and capital intensive nature of the market is expected to result in low trends of consolidation in the near future,” adds Joshi.