Boom in processing chemicals forecast
TA News Bureau
Growing global demand for automobiles, particularly in emerging markets, and the expected aftermarket expansion are set to push demand for rubber processing chemicals. The market for such speciality chemicals. The market for such speciality chemicals is to grow nearly five per cent per year in the tyre segment alone, says industry analyst Jason Carnovale of Cleveland-based Freedonia Group. In an interview he says the robust market in Asia will be the most important driver of this growth, which is expected to touch 1.5 million tonnes annually
Global demand for rubber processing chemicals is forecast to increase 4.4 per cent per year through 2020 to 1.5 million metric tonnes, says market forecast by the Cleveland-based Freedonia Group. Its industry analyst Jason Carnovale told Tyre Asia in an interview that this growth will be driven by rising rubber consumption and the increasing rubber processing chemical loadings that are required to manufacture premium tyres, high performance automotive and industrial goods, and a range of other products where expectations of quality and long service lives are increasing over time.
“The tyre rubber market for rubber processing chemicals was over 850,000 metric tons in 2015,” he said adding that this is poised to get a boost particularly because of the demand for advanced high-performance products by consumers in the developing countries of the Asia/Pacific region. Adding to this upward demand will be the improving conditions in the mature markets of the US, Western Europe and Japan.
When asked why premium tyres, which consume higher loadings of antidegradants in their formulation, are set to capture a larger share of the world market, Carnovale said that all over the world tyre quality is improving due to increasingly strict environmental regulations, labelling requirements, and consumer preference for better performing tyres.
“This trend is further supported by rising per capita incomes, especially in countries like China and India, where motor vehicle ownership rates are increasing rapidly.”
The other reasons are market-driven demand for high-performance automotive and industrial goods, and a range of other products where expectations of quality and long service lives are increasing over time.
Freedonia Group, a division of MarketResearch.com, is a leading international industrial research company publishing more than 100 studies annually. More than 90 per cent of the industrial companies in the Fortune 500 use Freedonia research to help with their strategic planning.
Another highlight of the market forecast is that while the rubber processing chemical demand will increase faster than rubber consumption, demand for these chemicals will remain tightly correlated with rubber consumption within individual countries.
As such, broad trends that influence demand for rubber used in tyres and industrial products will have a strong impact on rubber processing chemicals, Carnovale said.
He said rising motor vehicle ownership rates in developing nations will support local tyre production, necessitating additional consumption of processing chemicals.
Non-tyre rubber chemical demand will also benefit from a healthy outlook for world vehicle production, as well as continuing industrialisation in the developing world, his research has shown.
Commenting on China’s demand for rubber processing chemicals impacting the global market, he said its market is the largest outlet for rubber processing chemicals globally, which means that trends there will have a strong impact at the world level.
“In addition, China is home to several significant producers of antidegradants and accelerators, and these companies sell both to the domestic market and export worldwide,” he pointed out.
Capacity expansion in China has further influenced the industry by making large volume commodities like 1,3-dimethylbutyl-N’-phenyl-p-phenylenediamine (6PPD) less attractive for higher cost European and North American manufacturers. Lanxess even attempted to divest its related business in 2013 before ultimately deciding to reorganise it internally, he noted.
He, however, said the potential for an economic slowdown in China is a significant concern for the rubber processing chemical industry. Rubber demand growth in China has already decelerated in recent years as the country faces challenges related to its real estate and financial markets.
But the Chinese market is expected to remain healthy through 2020 as vehicle production will continue to remain strong, and the country is forecast to contribute nearly half of the incremental global demand growth.
Both Japan and Western Europe are expected to see a reversal from declines in rubber processing chemical demand experienced between 2010 and 2015, while US demand accelerates due to improving market conditions.
However, Carnovale said advances in all the three of these industrialised areas are projected to remain well below the world average through 2020, reflecting market maturity and limited opportunities for additional rubber consumption or increases in processing chemical loadings.
Explaining the scenario of complex curing systems involving secondary or ultra-accelerators used in more specialised formulations, he said that high quality tyres with low rolling resistance, very long tread life, and other premium characteristics require a number of different changes to the compounding formulations in components such as treads and sidewalls.
“For example, treads are increasingly compounded with elastomer blends that are less compatible and more difficult to process and incorporate more advanced silica compounds and coupling agents. In some cases these changes reduce the effectiveness of conventional curing systems, in turn requiring selection of different or more complex accelerators,” said Carnovale.
Rising vehicle ownership rates in developing nations will support local tyre production, necessitating additional consumption of processing chemicals. Non-tyre rubber chemical demand will also benefit from a healthy outlook for world motor vehicle production, as well as continuing industrialisation in the developing world