How Is the Rubber Industry Growing?
Ongoing supply chain disruptions and price changes driven by inflation are hampering industries all over the world. However, the rubber market remains strong—and growing.
The Asia-Pacific region remains the world’s largest supplier of natural rubber, and China has become the world’s largest consumer, using roughly 40% of annual supply. This is largely due to rapid growth of the country’s automotive and tire production, making China one of the top three automotive manufacturing hubs in the world. Even on a global scale, the primary industries driving increased demand for rubber are tire and automotive. About 40% of the average tire’s composition is rubber, as are many components throughout the vehicle.
While synthetic rubber represents a slightly larger percentage of the overall rubber market, demand remains high for both synthetic and natural rubber. While synthetic rubbers can be more cost effective in some contexts, many industries prefer the material properties of natural rubber for certain applications.
Rubber Industry Trends
Environmental and Sustainability Initiatives
The rubber industry is exploring multiple avenues for becoming more sustainable, from reclaimed materials to renewable sources. In some parts of the world, legislation is driving the process.
January 1, 2023 marks the first active day of the German Supply Chain Due Diligence Act (SCA), which was first passed in 2021. The SCA requires all companies of a certain size to adhere to certain practices to minimize environmental damages and human rights violations throughout their supply chains, putting full responsibility on the companies to manage these matters. And the rest of Europe isn’t far behind: The European Union (EU) is reported to be drafting a similar law with much stricter guidelines than the SCA. While the SCA currently only applies to companies with over 3,000 employees, the EU’s new initiative will be enforceable for companies with as little as 250 employees.
At this stage, the American rubber industry is not as heavily regulated, and there is very little legislation in place that could be compared to what’s happening in Europe. However, consumer pressure is forcing the industry’s hand in other ways. OEMs are already pushing their suppliers to find sustainable solutions, and all the big players in automotive have released sustainability pledges. Tier suppliers who want to remain competitive will be forced to change their practices to match demand for sustainability.
Many other sustainability projects are happening behind the scenes, including more exploration into clean chemistry and reclaimed materials. We may not see these put into practice on a commercial scale in 2023, but they will be a hot topic in development conversations throughout the rubber industry.
Ongoing Ripples From the COVID-19 Pandemic
While the worst of the COVID-19 pandemic appears to be in the rearview mirror, the effects continue to be felt—and continue to drive both demand and decision-making throughout the rubber industry.
The pandemic has shone a harsh light on the global supply chain, highlighting vulnerabilities that could become national security issues or disrupt entire supply chains. Many manufacturers are investigating on-shore sources for essential materials, with the government providing funding and other resources to make domestic options available. Additionally, many people became more concerned about health and hygiene in the wake of the pandemic, which has driven up demand for safety products such as condoms, gloves, and other PPE.
United States Infrastructure Bill
In 2021, Congress passed a historic infrastructure bill that will pour $1 trillion into the U.S. economy over a ten-year period and create upwards of 1.5 million jobs per year. The bill has finally reached a spend point, which is expected to boost demand for materials related to infrastructure and commercial construction. Conversely, residential construction is experiencing a slump.
Ensure Quality With Rubber Testing From ACE
Rubber manufacturers are under significant pressure to meet sustainability demands, source materials domestically, and keep up with a rapidly changing industry. And ACE is here to help.
Our experts have years of experience qualifying new materials, testing experimental compounds, and supporting clients as they navigate the fast-paced evolution of the rubber industry. We can help you maintain your promise to deliver quality products even as you change and adapt your approach to meet demand. You can count on us for quality data, excellent service, and the fastest turnaround times in the industry, so you can keep pace with what’s going on around you.
To learn more about what we’re predicting in 2023 or to start a project, get in touch.