By P Venugopal :
The global rubber processing chemicals market is expected to witness rapid growth in the coming years thanks to a spurt in demand from the tyre and automotive industries and their increasing application across diverse industries. However, stringent regulations to reduce harmful greenhouse gas emissions, increasing production of green tyres, economic slowdown in China etc. pose serious challenges
The global rubber processing chemicals market is witnessing rapid expansion thanks to the increasing demand from the tyre and automotive industries and their application across diverse industries.
The tyre industry is the major consumer of rubber chemicals, holding over 70% of the market share. Use of rubber processing chemicals make tyres durable and provides them strength to withstand harsh environment. The demand from the tyre industry is projected to rise further with the expansion of the automotive industry.
Apart from tyre and automotive sectors, rubber processing chemicals are increasingly used in industries such as construction, electric & electronics, medical, aerospace, polymer modification, and footwear production. There is rising use of rubber processing chemicals as roofing materials, floor coverings, sound insulators, and sealants in the construction industry. The growth in these sectors is also aiding the expansion of the rubber processing chemicals market.
The demand for carbon black too is on the rise in overseas and Indian markets. However, as pointed out by Toon Howe Tan, Vice President & Regional Director Asia Pacific at Cabot Corporation, in an accompanying interview, capacity expansion by the carbon black industry lags behind demand growth.
Bright future outlook
According to Transparency Market Research (TMR), global rubber processing chemicals market, valued at US$3.4 billion in 2015, is expected to reach US$ 5.1 billion by the end of 2024. If the figures hold true, the global rubber processing chemicals market will exhibit a CAGR of 4.7% between 2016 and 2024, TMR says.
The Asia Pacific region has emerged as the dominant market for rubber processing chemicals. Rising demand from China and India, besides the demand from the flourishing automotive and construction industry in Japan, offers immense opportunities for rubber chemical manufacturers. China accounts for the highest market share across the globe owing to growing rubber industry in the country.
The Asia Pacific region also exhibits an expanding automotive industry, which will boost the rubber processing chemicals market. Moreover, growing industrialization in Asia Pacific is anticipated to fuel the growth of rubber chemicals market in the coming years.
India’s growth potential
The Indian rubber chemical industry has high growth potential triggered by increased consumption and steady growth in tyre and rubber industries. According to a study by the global consulting firm McKinsey and Company, the specialty chemicals industry in India will grow at 15-17% per year to reach $ 80-100 billion by 2020.
Strong growth in the country’s industrial and automotive sectors, coupled with declining raw material prices, favourable Government initiatives and growing investments in production facilities of rubber processing chemicals are among the key factors expected to aid the rubber processing chemicals market in India.
As internal production of rubber chemicals falls short of demand, many major consumers are depending on imports to meet their requirements. However, there are complaints that indiscriminate dumping of rubber chemicals into India is harming the interests of the domestic producers. Consequently, the Government of India has imposed anti-dumping duties on imports of certain rubber chemicals from the European Union and China.
Strong manufacturing base
Some of the major players operating in the Indian rubber processing chemicals market include NOCIL Limited, LANXESS India, BASF India, Yasho Industries Pvt. Ltd., Swarup Chemicals Pvt. Ltd., PMC Rubber Chemicals India Pvt Ltd, Pukhraj Additives LLP, Finornic Chemicals (India) Pvt. Ltd., Associated Rubber Chemicals (Kochi) Pvt. Ltd., Acmechem Limited, Ceyenar Chemicals etc.
NOCIL is the largest rubber chemicals manufacturer in India with state-of-the-art manufacturing facilities at Navi Mumbai and Dahej (Gujarat). In June 2018, NOCIL commissioned the Phase-1 of expansion of capacities of rubber chemicals and their intermediates at the company’s plant in Navi Mumbai.
The company proposes to invest Rs. 1.68 billion in Phase-2 expansion at Navi Mumbai and Dahej which is expected to be completed during Q1 FY 2019-20.
LANXESS India has a strong manufacturing base in India with two manufacturing facilities at Jhagadia in Gujarat and Nagda in Madhya Pradesh. LANXESS has invested a sizeable amount in India over the years in greenfield investments, acquisitions and up-gradation of assets, which validates the potential of the Indian chemical industry. The company is planning further expansion at its Jhagadia site.
BASF is another major player in the Indian rubber chemicals market. It has 11 production sites in India, 2,313 employees as of December 31, 2017 and offices throughout the country. In 2017, BASF registered sales of approximately €1.3 billion to customers in India.
The Mangalore site is BASF’s largest manufacturing site in South Asia (in terms of area). Its other key production sites are located at Dahej, Mangalore, Ankleshwar, Thane and Chennai.
BASF’s Innovation Campus Asia Pacific in Mumbai has state-of-the-art laboratories for chemical synthesis, application and process development, as well as analytics. It enables global know-how exchange and fosters collaboration with customers, industrial and academic partners. The campus accommodates up to 300 scientists and bring together top scientists from India and other parts of the world.
Challenges & opportunities
However, the rubber chemicals industry is facing many challenges. There is growing concern over the environmental hazards prosed by the industry, which has forced governments in Europe, North America etc. to enact stringent regulations to reduce harmful greenhouse gas emissions. This has entailed huge investments by manufacturers in pollution control measures and also impacted the market for rubber processing chemicals.
The spurt in production of green tyres is expected to reduce consumption of rubber chemicals and carbon black by the tyre industry. Economic slowdown in China, the largest consumer of rubber chemicals, is another cause of concern for the industry. The slowdown has affected the largest end-use market, the automotive industry, and also hampered the growth in the rubber and allied industries in China.
Increasing R&D expenditure for rubber processing chemicals due to regulations imposed by governments and intense competition due to the presence of various vendors and substitute products too pose new challenges to the rubber chemicals industry.
However, the rubber chemicals market offers lucrative opportunities for potential investors in view of the projected growth in demand in the coming years. The manufacturers have to equip themselves to meet the challenges and ramp up their production capacity in order to bridge the demand-supply gap in the rubber chemicals market.