Asia is now home to around 92% of the world supply of natural rubber, raw material for the production of thousands of articles of every day use. Tyre is prominent among them. The continent provides major portion of the vehicles in use around the world and around 70% of the global requirement of tyres to make them mobile. More than half of the synthetic rubber produced and consumed in the world also is now in Asia.
In the production of other rubber-based articles like auto rubber components, rubber -based industrial and engineering products, footwear products, latex-based products like latex foam and fibre foam, gloves, condoms, latex thread, catheters, nipples, sport goods like balloons, bladders and balls, the situation is not different. Moreover, South and South-east Asia form the hub of nearly 90% of the dipped products reaching the world market.
Spurt in consumption
Production of all these moved ahead mostly in the last quarter of a century, from 1985. Rubber consumption steadily gained momentum in the East and Asia grew into a formidable force in the world rubber industry during the period. In 1985, the Asian output of natural rubber was exceedingly high with 99.3% at 4,369,500 tonnes out of the world total of 4,400,000 tonnes. The output more than doubled to 9,585,000 tonnes by 2010, but the share came down to 93% in the world total of 10,291,000 tonnes. Thailand and Indonesia are in the forefront of NR production and the global supply of NR continues to be centered round these two nations.
Rubber consumption had made tremendous progress by 1985, aided by expanded use of motor vehicles and rapid development in the downstream tyre and rubber goods industries. The Asian rubber consumption of that year at 3.46 million tonnes was only one-fourth of the world total of 13.43 million tonnes. In the next 15 years, industrial development gathered momentum and the Asian NR consumption rose to 8.37 million tonnes by 2001.
Then Asia had the largest share with 47% of the world total, well ahead of Europe’s share of 28%, North America’s 18%, Latin America’s 6% and Africa’s 1%. The continent consumed 15,124,000 tonnes of rubber in 2010, around 62% in the world total of 24,422,000 tonnes. Of this, the share of NR was 7,454,000 tonnes and of synthetic rubber (SR) 7,670,000 tonnes. Obviously, Asia has been the centre-stage of the world rubber industry since 1985.
Asia’s NR power
World total of rubber plantations was around 6.1 million hectares in 1985. This rose to 11,500,000 ha. in 2010. Asia has the most ideal land mass for Hevea rubber cultivation in the world, mainly the Thai-Malay peninsula, Sabah and Sarawak in East Malaysia, Sumatra, Java and Kalimantan in Indonesia, southern part of India and the South-western part of Sri Lanka. The continent’s share in world rubber plantations is 91% at 10,489,000 hectares. Indonesia with 3,445,000 ha. is the single largest rubber cultivating country in Asia. At the world level too, the country has the largest share — around 30% of the total. Thailand with 2,761,000 ha. and Malaysia with 1,019,000 ha. are the other two major rubber growing countries. These three combined accounted for 69% of the rubber area in Asia in 2010, at 7,225,000 ha.
World production of natural rubber was 4.4 million tonnes in 1985, in which the share of Asia was as much as 91% at 4.0 million tonnes. The Asian production is mostly smallholder based, but relatively large, State-owned plantations dominate in China, Vietnam and Cambodia. While Thailand has a little over 95% participation of small holdings, their share in Malaysia is around 90% and in Indonesia about 85%. Asia continues to be the largest supplier NR to the world. The world NR production rose to 10,291,000 tonnes in 2010 and the Asian share increased to 93% of this at 9,585,000 tonnes.
Thailand at the top
Thailand led the pack of major NR producing nations with output of 3,252,000 tonnes in 2010, followed by Indonesia with 2,829,000 tonnes. Though Indonesia possessed the largest NR planted area, the country could not match the yield level of Thailand. In the last 25 years Thailand vastly expanded the rubber area at an annual average of 40,000 ha. using high yielding planting material and adopting systematic cultivation practices, while modern cultivation practices were alien to majority of the small holdings in Indonesia. The average productivity of Thailand sharply rose to 1,720 kg/ha. in 2010, while Indonesia’s average could reach only 987 kg.
Malaysia was a distant third with 939,000 tonnes of NR output in 2010. However, the country did Asia proud by becoming the largest producer of dipped goods — latex gloves, catheters and condoms — meeting almost 45% of their world requirement. India was the 4th NR producer with 851,000 tonnes in 2010. This country holds record for the highest world average productivity in rubber continuously for about two decades. The average productivity in 2010 was at 1,784 kg/ha. Vietnam was the 5th largest NR producer with 754,500 tonnes in 2010 and China the 6th with 647,000 tonnes. China has over one million hectares of rubber plantations, more than what India and Vietnam hold at 0.7 million ha. apiece, but the Chinese output remained low owing to substantial difference in productivity. China’s productivity averaged 1,143 kg/ha. in 2010 against India’s 1,784 kg. and Vietnam’s 1,720 kg.
The other Asian countries supported the Asian NR output in a modest way. In the year 2010, Sri Lanka contributed 153,000 tonnes, Myanmar 112,000 tonnes, Philippines 99,000 tonnes, Cambodia 42,200 tonnes, Bangladesh 18,000 tonnes and Laos an estimated 7,500 tonnes. Almost the entire production of Cambodia and Laos was exported.
The China story
At the same time, China and India have been fully using the NR and SR production in domestic consumption. China’s rubber consumption of 8.1 million tonnes in 2010 was the major factor behind the Asian advancement in global rubber industry. It was as much as one-third of the world total. The country has been importing large quantum of NR and SR to feed its mighty rubber manufacturing sector. With massive production of automobile tyres and non-tyre rubber products, progress in China’s rubber consumption is a major factor in the Asian growth story.
The two major NR producers have been exporting large portions of their production in 2010 — Thailand 2,866,000 tonnes and Indonesia 2,374,000 tonnes. Export of these two countries measured up to 78% of the Asian output of 9,608,000 tonnes. Though Malaysian output in the year was 939,000 tonnes, the country exported as much as 1,117,000 tonnes. Malaysia purchases sizable quantum of rubber from the neighbouring nations to meet its export commitments. As much as 708,000 tonnes of NR was imported by the country in 2010.
Vietnam is another country that buys NR abroad for export. Its export in 2010 was 782,000 tonnes, against the output of 755,000 tonnes and consumption of 140,000 tonnes. Sri Lanka also buys rubber abroad though not in sizable quantum, for supplementing the domestic export. In 2010, the country imported 12,400 tonnes of NR while the export amounted to 51,500 tonnes.
Asian ascendance in SR
Asia has come a long way during the past 25 years in the production of synthetic rubber. The 1985 production of 1.57 million tonnes of SR was only around 17.6% of the world output of 8.94 million tonnes. Europe was the largest SR producer in 1985 with 4.21 million tonnes, while North America composed of Canada, Mexico and USA, could produce only 2.24 million tonnes. Europe was continuing the lead from the time of polymerizing methyl isoprene in 1909 in Germany, the first form of synthetic rubber ever to be made in the world. The erstwhile USSR with 2.13 million tonnes was the top producer in 1985, both in Europe and at the world level. The Asian share steadily rose to 50.7% at 7.1 million tonnes in 2010.
The Asian majors in SR production are China, Japan, South Korea and Taiwan while Thailand, Malaysia, India, Indonesia and Iran follow with modest production. China emerged as the largest world producer of SR in 2008 with 2.33 million tonnes, while USA which held the top billing until that time, could produce only 2.31 million tonnes.
China’s SR output in 2010 rose to 3.14 million tonnes, against USA’s 2.32 million tonnes. The Asian output of SR was 7,072,000 tonnes in the year, against 3,787,000 tonnes in Europe including the Russian Federation and 2,458,000 tonnes in North America. While the Asian output grew by 447% over the 25- year period, growth in North America was only 10%. In the case of Europe, there was negative growth by 10%.
NR vs SR consumption ratio
World consumption of NR and SR was 13.3 million tonnes in 1985; 4.35 million tonnes of NR and 8.95 million tonnes of SR. The consumption was almost in tandem with the production. The share of Asia in this came to 26.6% at 3.4 million tonnes. Asia has been making rapid strides in production and consumption of the rubbers since then as demand for elastomers was continuously increasing in line with the steady rise in population and the improvement in the living standards of the people. Despite setbacks to the Asian economy caused by the oil crises of 1982, the Asian financial crisis of 1998 and the global economic slowdowns of 2001 and 2008, world consumption of rubber rose to 24.4 million tonnes in 2010, with 15.2 million tonnes as the Asian share.
China’s rubber consumption at 8.1 million tonnes in 2010 was more than 50% of the Asian consumption, triggered by the boom in automobile production and consequent high demand for tyres and other auto rubber components. The output of passenger cars was 32,108,914 in Asia out of 58,264,344 the world over, at 55.1%. Tyres of commercial vehicles consume almost 3 times rubber than the tyres of passenger cars. Asian production of commercial vehicles in 2010 has been estimated at 8,460,270, around 43.7% in the world output of 19,345,557. In the Asian vehicle total of 40,569,184, China had the largest share of 45% with 18,264,667 vehicles (Car + CV).
The consuming giants
Two dominant Asian users of rubber in 1985 were Japan with 1,487,000 tonnes and China with 660,000 tonnes. Of this, Japan’s share of natural rubber was 539,500 tonnes and of China 415,000 tonnes. Japan was the top producer of synthetic rubber with 1,158,000 tonnes in 1985 of which 1,026,000 tonnes was used in products manufacture. The country retained the Asian supremacy in rubber consumption for the next two decades. All the while, China was making rapid progress in SR production and by 2005, moved ahead of Japan with 1,632,000 tonnes while Japan’s output remained a shade lower at 1,627,000 tonnes. However, Japan maintained the top slot in SR consumption for four more years.
In 1999, China surpassed Japan in SR consumption with 1,455,000 tonnes while Japan could consume only 1,138,000 tonnes. Further progress of China was mind boggling. In 2002, the country became the top world consumer of SR with 1,941,000 tonnes while USA, which reigned at the top till then, had to step down to the second place with 1,895,000 tonnes. Six years later, in 2008, China marched ahead of USA to adorn the first place in production of synthetic rubber as well, as its output at 2,325,000 tonnes scored over USA’s 2,275,000 tonnes. China further improved upon its output with 3,137,000 tonnes in 2010, while USA could produce only 2,322,000 tonnes.
Asia’s strides in manufacturing
Asia has the largest base in making rubber products. With advent of the World Trade Organisation and the consequent globalisation of trade, many multinational companies from Europe and North America started rubber manufacturing ventures in the cost effective Asian countries, particularly in China. Most of the natural rubber producing countries attracted investment of multinationals on account of less labour cost, availability of technically educated manpower and the major raw material, ie NR. This has helped advanced technologies in product manufacture to percolate into the Asian region and Asia is now better placed to provide quality rubber products to the world market.
Tyres coming in around 500 varieties in pneumatic and solid versions are the prime products among the rubber articles. Out of the top 75 global tyre makers, 49 are from Asia - 17 from China and 10 from India. The continent is home to five out of 10 multinationals — Bridgestone, Sumitomo, Yokohama, Hankook and Kumho. The other five — Michelin, Goodyear, Continental, Pirelli and Cooper – do not stand isolated; they have production facilities in Asia, attracted by the comparatively low cost of production and the fairly large pool of technical manpower. The Asian facilities of these companies tap the gigantic Asian market, in addition to meeting part of the tyre demand in Europe and North America. A major portion of the new capacity creation in tyre production took place in Asia in the last decade, particularly in China and India.
Of the global truck tyre market of 146 million a year, Asia accounts for 45% at 65.7 million, while Europe’s share is only 18% at 26.28 million, North America’s 16% at 23.36 million, South America’s 11% at 16.06 million and Africa and the Middle East combined also with 11% at 16.06 million. The robust demand ahead for new vehicles in the Asian region, especially in the two economically advancing most populous countries China and India, will stimulate strong growth in the tyre sector.
Other rubber products
In addition to tyres, Asia has supremacy over other continents in production of industrial, engineering and general rubber goods. Besides the majors China and Japan, countries like the Republic of Korea, Taiwan, India, Malaysia, Thailand, Indonesia, Sri Lanka, Philippines, Israel, Iran, Pakistan, Vietnam and Bangladesh have reasonably good rubber manufacturing ventures. In the production of dipped goods like gloves and condoms and medical rubber products, Asia has the virtual monopoly. That lead is likely to continue unabated at least in the next decade.