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Globally, rubber demand is expected to grow 1.8% in 2015 and 4.1% in 2016, while plummeting rubber prices, due to oversupply, continue to impact rubber-producing countries in Southeast Asia. The biggest buyer of rubber, the tyre sector, has been enjoying a period of relatively strong growth, against the back of demands for better safety standards, such as tyre labelling. These were some of the issues addressed at the World Rubber Week held from 24-25 March in Singapore, organised by SingEx Exhibitions, in partnership with International Enterprise (IE) Singapore, International Rubber Study Group (IRSG) and Singapore Exchange (SGX).
At the opening of the biennially-held rubber week, Stephen Evans, Secretary-General of IRSG, said, “This is the fifth year of disappointing global demand, against excess capacity, and a general sentiment of gloom, due to the slowdown of the Chinese economy.”
The oversupply of rubber is brought about by expansions of plantations in Southeast Asia from 2011- 2014 and will hold on until 2016, according to Evans. The glut is expected to drop to 51,000 tonnes by 2016, from 77,000 tonnes in 2015.
With tyres accounting for 70% of natural rubber use, tyre companies are certainly not complaining about the cheaper prices of rubber. For instance, Goodyear Tire & Rubber Company North America’s largest tyre maker, said its record income of US$1.7 billion in 2014, up 8% from a year earlier, was helped by lower raw material costs.
Luc Minguet, Chief Procurement Officer at French tyre maker Michelin, said the supply of rubber will be adjusted, because most rubber plantations are run by smallholders “who will not be able to make a living at the current prices.”
Middle classes to drive growth of tyre sector
Meanwhile, IRSG expects tyre sales to grow. “Passenger car tyres sales will reach 1.72 billion units by 2023 from 1.23 billion in 2014; commercial vehicle tyre sales will reach 727 million units from 479 million units and 1.6 billion vehicles are to be on the roads by the end of the decade,” said Evans.
While truck and passenger car tyre sales have expanded slightly in North America and are flat in Europe, car tyre sales continue to increase in new markets such as China, India, Southeast Asia, Brazil and Mexico, according to LMC Automotive.
In his keynote address at the rubber summit, Richard J. Kramer, Chairman/CEO of Goodyear, said the growth of the middle classes in developing markets will be a key driver for industry growth. “The significant GDP growth in emerging markets and the continuing emergence of the middle classes will lead to increased vehicle sales.”
Kramer also sees growth opportunities in matured markets, like Europe, the US and Canada. “The growth is being driven by the changing mix to high value-added tyres with increasing technology. Profitable segments – such as winter tyres, SUV tyres and light truck tyres – offer higher margins.”
Furthermore, Kramer discussed how the newest generation of consumers, the Millennials, are changing the retail landscape for the industry. “In the US, there are 80 million millennials that have a US$1 trillion buying power. They have the leverage, and are buying what they want, when they want, and how they want,” he said.
He advised tyre makers to become consumerdriven and technology savvy, stating that Millennials were resorting to buying products online. “We have to transform tyre buying and sell a convenient and frictionless experience with our product and make the tyre buying process easier.” Kramer pointed out that Goodyear had become the first tyre maker in the US to sell tyres online.
Safety issues tightened with tyre labelling
Tyre labelling will become an industry standard and allow for product differentiation, said Kramer. Europe was the first to apply it in 2012, followed by the US and Latin American countries.
The introduction of tyre labels for passenger car tyres in Europe and has made factors such as energy efficiency (rolling resistance) and safety (wet traction) visible and comparable for drivers. By doing this, the EU hopes to increase road safety, make shopping for tyres more cost-effective and reduce the impact tyres have on the environment. EU‘s plan is to tighten its tyre label regulations up till 2020.
Innovating to keep the green tyre sector rolling
Since 2010, the consumer market for green tyres has grown by 30% a year. By 2017, the global green tyre market will be worth US$70.6 billion, according to Smithers Rapra. In its report The Future of Green Tires to 2017, Smithers Rapra defines green tyres as “tyres that are optimised for low rolling resistance and/or which use materials, especially elastomers, obtained from renewable (sustainable) resources”.
One example is the use of rice husk silica for tyres. Italian tyre maker Pirelli started using it in its tyres in 2013 and now Goodyear, a US$20 billion sales company, is following suit. In Asia, where rice is mostly consumed, after rice is harvested, rice husks are landfilled or burnt. Goodyear says it is utilising ash, from the burning of rice husks to produce electricity, as an environmentally friendly source of silica for use in its tyres.
The company has tested the silica over the past two years and found its impact on tyre performance to be equal to traditional sources like sand, and expects to launch the tyres this year, said Kramer.
Greening the silica market
German speciality chemicals supplier Evonik Industries, the only company worldwide that produces both silica and silanes, is counting on research regarding improved fillers for modern high-performance tyres. To this end, Evonik is investing a mid-single digit million Euro amount in several German sites. At its Wesseling site, an additional pilot-scale line for precipitated silica is coming on stream.
Silica/silane systems are an essential component of the rubber mixture of green tyres. Without them, the improved wet traction, reduced rolling resistance and abrasion of modern tyres would be impossible. The treads of such high-performance tyres are essentially based on synthetic rubber with other added components.
Silica is added to this mixture as a reinforcement filler and generates the desired special properties. However, rubber and silica are chemically incompatible with each other. For this reason, the production requires silanes as coupling reagents. The silica/silane reinforcement systems also benefit the environment as they help reduce fuel consumption by up to 8%.
Evonik is working to develop improved filler systems, to further increase the wet traction, reduce the rolling resistance and improve winter properties, meaning, the tyre’s grip in snow and slush conditions.
Also, when conventional silanes react with silica, they release volatile ethanol, which must be treated safely and in an environmentally friendly way during the tyre production. Thus, Evonik will bring to market a VOC (volatile organic compound)-free silane called XP Si 466 GR, in the near future. The finished tyres also do not emit ethanol at a later stage.
Paving the future with concept tyres
The future of the tyre sector also depends on new material-enhanced concepts that will revolutionise how tyres are used and perceived.
Goodyear showcased a futuristic tyre concept that has the capability to produce its own electricity at the March-held Geneva International Motor Show.
Simply called BH03, the tyre can transform generated deformation and vibrations into electrical energy and offers the possibility of charging the batteries of electric cars by transforming the heat generated by the rolling tyre into electrical energy.
As interest for electric cars grows in the global marketplace, this type of innovation is expected to play a role on the future of mobility. The tyre is a purely conceptual development and the company says there is no plan to release this tyre onto the market as yet.
The 85th motor show also had another conceptual tyre from Goodyear. Named Triple Tube, it contains three tubes that adjust tyre inflation pressure in response to changing road conditions, delivering new levels of performance and versatility.
“These concept tyres reimagine the role that tyres may play in the future,” said Joe Zekoski, Goodyear’s Senior Vice President. “We envision a future in which our products become more integrated with the vehicle and the consumer, more environmentally friendly and more versatile.”