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Natural Rubber challenges in delivering a sustainable global rubber industry going forward
Fazilet Cinaralp, Secretary General, ETRMA
Wageningen 24 September 2012
1
OVERVIEW
1. DEMAND trends & evoluNon of the tyre market
2. Impact on Natural rubber supply;
3. Sustainability Challenges of natural rubber 2
LEADING VOICE OF THE EUROPEAN TYRE & RUBBER MANUFACTURERS
~4200 companies, 12 Tyre Corporate HQs, 91 tyre plants, 15 R&D centers In 2011, turnover close to €50 bn of which tyre companies € 29 bn Employing 374,000 persons 6 out of top 10 global tyre companies are ETRMA members, realizing 65 % of the world tyre industry turnover (2011 ranking)
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TYRE CORPORATE members are
• Driven by the tyre industry consuming ~ 70 % of the NR produced.
• General rubber goods include: non-‐tyre automo@ve applica@ons, shoes, hoses and belts. Shoes take up around a third of this segment.
• Natural rubber latex (12% of natural rubber demand) is used for gloves, threads, foam, adhesives and sealants, catheters, carpet backing and condoms. Gloves (primarily for medical use) take more than half of global latex.
DEMAND
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• GDP is the main driver of vehicle
and tyre demand
• Recession in 2009 caused a serious dip in vehicle demand in mature markets, but emerging markets con@nue to prosper at lower rates.
• Global GDP grew by 5.3% in 2010 and 2.9% in 2011, with growth slowing down during the second half of the year. Growth has remained weak in 2012 as the Eurozone crisis con@nues
• Light vehicle produc@on expected to grow over 120 million units, with emerging markets accoun@ng for 69% (LMC Interna@onal)
TYRE MARKET © LMC International, 2012
All rights reserved
-4
-2
0
2
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2000 2002 2004 2006 2008 2010 2012 2014 2016G
DP
Gro
wth
(% c
hang
e)
Advanced Emerging World
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TYRE MARKET • A major evolu@on in the tyre sector : mul@plica@on of regula@ons, mainly regarding
environment protec@on and safety. • Star@ng November 2012, mandatory labeling of tyres in the EU; inform end-‐customers on
three performances: energy efficiency, wet grip and rolling noise. Addi@onally, there will be minimum compliance thresholds in order for tyres to be sold –that will be introduced gradually >>2020.
• Similar regula@ons already exist in Japan and will be implemented in South Korea, the USA and Brazil and are announced in China ...
0%
20%
40%
60%
80%
100%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024LRR
repl
acem
ent t
yre s
ales
as a
prop
ortio
n of
to
tal O
E tyr
e sal
es
Europe E Europe NAFTA SAmerica East Asia
China India ASEAN Other© LMC International, 2012 6
In other words, demand for low rolling
resistance tyres is increasing
Changes raw material demands in tyre
• Today, there are about 1.2 billion tyres for passenger cars and light trucks sold in the world every year. This figure should grow to more than 2 billion in 2020.
• For trucks and buses, there are about 120 million tyres sold throughout the world every year. This figure will grow to 200 million by 2020.
• With rising vehicle sales and a larger vehicle parc, the emerging markets have become the engines of tyre demand growth
TYRE MARKET © LMC International, 2012
0
200
400
600
800
1,000
1,200
1,400
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Tyre
sal
es ('
000
unit
s)
Traditional Emerging
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NATURAL RUBBER
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1990 1993 1996 1999 2002 2005 2008 2011
Prod
ucti
on ('
000
tonn
es)
Malaysia Indonesia Thailand India Vietnam China Other
© LMC International, 2012 8
NATURAL RUBBER
• Natural rubber’s specific chemical characteris@cs have made it the source of choice in many specialized applica@ons . Almost all natural rubber is extracted from one biological source: the Brazilian rubber tree (Hevea brasiliensis)
• As prices rose in the 2000s so did the intensity of tapping and produc@on. This is linked to government funded plan@ng programmes (mainly in Thailand and Indonesia)
• Malaysian rubber produc@on is among the highest cost and hence the most price sensi@ve. Replan@ng levels have picked up with higher prices. The government is commifed to increasing the rubber area.
• Vietnamese natural rubber area has risen to 830,000 hectares; this is already above the government target of 800,000 ha by 2020. This increase in area will lead to higher produc@on. With land constraints, estates are inves@ng in neighbouring countries
• Global producNon is expected to reach 16 mn tonnes by 2025
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Source:IRSG
2011- NATURAL RUBBER CONSUMPTION
EU 27 China India Japan USA Rest of the
world 2011 1215,4 3602,7 957,2 765,1 1029,3 3354,2
11%
33%
9% 7%
9%
31% EU 27 China India Japan USA Rest of the world
in 000 tonnes
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Source: IRSG, Eurostat and LMC
EU- NATURAL RUBBER CONSUMPTION
in 000 tonnes
1,394
1,257
829
1,132 1,223
1,456 1,338
903
1,214 1,313
74% 73% 72% 74% 75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
500
1,000
1,500
Jan.-‐Dec. 2007 Jan.-‐Dec. 2008 Jan.-‐Dec. 2009 Jan.-‐Dec. 2010 Jan.-‐Dec. 2011
EU NR Consump@on Total EU NR Import % tyre demand of NR 11
WORLD NR PRODUCTION…
0
2
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6
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10
12
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16
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1990 1995 2000 2005 2010 2015 2020 2025
Prod
ucti
on (m
n to
nnes
)
© LMC International, 2012 12
Combining demand and supply forecasts suggests the market will move to a deficit in 2023.
-400
-300
-200
-100
0
100
200
300
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2009 2011 2013 2015 2017 2019 2021 2023 2025
Supp
ly s
urpl
us/d
efic
it ('
000
tonn
es)
© LMC International, 2012
NATURAL RUBBER
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CHALLENGE : 1
SUBSTITUTION BETWEEN NR AND SR = limited by technical factors.
Even if, with the rise in natural rubber prices, switching has occurred in emerging markets, in less technically demanding applicaNons
0
1,000
2,000
3,000
4,000
5,000
6,000
1999 2001 2003 2005 2007 2009 2011
$ p
er t
on
ne
TSR20 SBR
© LMC International, 2012
Substitutability of natural and synthetic rubber has neither increased nor decreased over the last twenty years (ETRMA-Steptoe/LMC study on influencing factors on price volatility, 2011
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CHALLENGE : 2
SUSTAINABILITY OF NATURAL RUBBER
• As a renewable resource, the natural rubber sector is well placed to play an important role in lowering the environmental impact of road transport and contribuNng to sustainable agricultural development.
• Apart from the monopoly problem, world producNon of natural rubber, is facing a number of threats: high price volaNlity, surge of demand in the emerging countries, the vulnerability of the rubber tree to pests and diseases; its culNvaNon in tropical climates close to the equator; the latex allergy it can cause…
• In order to take advantage of the opportuniNes, natural rubber producing and consuming countries need to develop a globally credible and accepted framework for defining and implemenNng sustainable natural rubber producNon 15
CHALLENGE : 3
ALTERNATIVES TO NR FROM RUBBER TREES
? Uncertainty of access – security of supply ? Price vola@lity 2.5 @mes over two-‐year window! ? Reliance of industry over certain parts of the world ? limited growing area restricted to tropical climates close to the equator
Have prompted industry majors to look for alterna>ves to rubber trees Guayule Russian Dandelion
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Industry long-‐term goal to contribute to a fully sustainable tyre and rubber industry
There is need to op>mize the agronomic and processing technologies necessary to produce tyre-‐grade rubber in adequate quan>>es for manufacturing purposes
Efforts towards subs>tu>on in other industrial applica>ons than in tyres need be pursued
ETRMA remains suppor>ve of collec>ve efforts towards stable supply and sustainability of raw materials.
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CONCLUSION
Thank you www.etrma.org
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