Thought the rubber sector is facing challenging times due to an oversupply in rubber and decreased prices, according to the International Rubber Study Group (IRSG), total rubber demand globally is forecast to increase at 1.8% and 4.1% in 2015 and 2016, respectively. The global demand for natural rubber is expected to increase by 3.1% in 2015 under the IMF Scenario, and by 4.4% in 2016. World synthetic rubber demand is expected to increase to 16.8 million tonnes in 2015 and rise to 17.5 tonnes in 2016 under the IMF Scenario.
This was the observation of the IRSG at the World Rubber Week, consisting of the World Rubber Summit, Tyrexpo Asia and Rubber Exchange Forum, held from 24 to 26 March at Singapore EXPO. It attracted over 5,000 rubber industry players from 109 countries. World Rubber Week 2015 was organised by SingEx Exhibitions, in partnership with International Enterprise (IE) Singapore, IRSG and Singapore Exchange (SGX).
Sunam Sarkar, President/CEO, Apollo Tyres, said, “The World Rubber Summit is a great forum to meet all relevant stakeholders in the industry, and hear their perspectives on key trends and issues. One key take-away is how we can and must leverage innovations in sustainability and technology to drive the rubber industry to greater heights in the future.”
Goodyear’s CEO, Richard Kramer discussed how the newest generation of consumers, the Millennials, are changing the landscape for the tyre industry. “Millennial consumers are not going to adapt to us and the way we’ve sold tyres for the past 100 years.”
Asia main focus of tyre sector
Asia continued to be the region to focus on for the tyre industry. Out of the world’s top 75 global tyre makers today, 49 are from Asia. Owing to the growing population of vehicle fleet, with China representing the strongest growth at almost 9% a year, the demand for rubber in Asia from the tyre market is enormous. For many tyre players, Tyrexpo Asia is the ideal platform for tyre manufacturers to showcase their wares.
“Stamford Tyres is a Singapore-brand and Tyrexpo Asia is our home-show, and probably the most important one in the season for us. It gives us an opportunity to reinforce our relationship with existing customers by showing them our headquarters and operations here. At the same time, we’ve had a few new leads from other parts of Asia, Africa and the Middle East. It’s a great place to showcase the new designs and products our Thai factory has come up with to customers old and new,” said Pat Berriman, Senior Vice President (Sales & Marketing), Stamford Tyres International.
“Tyrexpo Asia provided the ideal platform to showcase our new products developed for this region. This year we were very pleased to unveil our largest OTR all-steel radial tyre, the 27.00 R49, and the response has been very positive,” said Arvind Poddar, Chairman/Managing Director, Balkrishna Industries Ltd (BKT).
Paving the way for a regional trading hub in Asia
The Rubber Exchange Forum, a workshop on the educational and technical aspects of rubber trading, covered an overview of the history of the rubber market in Asia, an introduction to rubber futures contracts and a perspective on trading rubber futures.
The speakers highlighted that two rubber futures (RSS3 and TSR20) offered on the Singapore Exchange provide market participants with a reliable pricing basis as a point of reference for their physical cargo and to manage price risks. Delegates also learnt what trade finance is in the banking world, how it works, how it applies to the rubber industry; and the requirements and responsibilities that go with it.
Dr Tom James of the Renovatio commodity and energy hedge fund, said, “The Rubber Exchange Forum has attracted a large crowd, which clearly shows that there is a lot of interest in the market developments. There are exciting new developments in the Asian rubber market today, including the potential development of Singapore as a regional production neutral trading hub, plus the first signs of the opening up of the China commodity futures market to international traders via Shanghai free zone. The opening up of the China market will be a big positive for the Singapore trading hub due to increased arbitrage trading activity being made possible for more market participants.”
The next edition of World Rubber Week will be held in 2017.