The demand for reclaim rubber globally is inching up year after year and the trade war between China and the US has opened a window for export of reclaim rubber to USA, says Rajendra Gandhi, Managing Director, Gujarat Reclaim & Rubber Products Ltd. (GRP), one of the largest producers of reclaim rubber globally.
In an interview to Rubber Asia, he however adds that the Indian reclaim rubber industry is at the crossroads today as it is facing challenges on several fronts. There is overcapacity in the general purpose reclaim rubber and butyl reclaim rubber and factors such as stagnancy in the economy, unabated imports of tyres from China, wild fluctuations in the foreign currency etc. have added to the industry’s woes.
In the wake of growing radialisation of commercial vehicles, Gandhi underlines the need to develop technology to reclaim steel-belted radial tyres as high energy and robust equipment are required to pulverize such tyres and make them completely free of metal contamination. “To address the environmental concerns, the rubber goods manufacturers, the reclaim rubber producers and the society at large need to imbibe the culture of 3 R’s – Reduce, Reuse and Recycle,” he adds. EXCERPTS:

What is the present status of reclaim rubber industry in India and globally?

The reclaim rubber (RR) industry in India has had a slow run over the last 3 years on account of low virgin rubber prices and excess capacity in the industry. The RR industry is at the crossroads today. The industry has more than adequate capacity to meet the requirements of the local rubber industry.
The industry is facing challenges on several fronts since the collapse of the virgin/natural rubber prices. The stagnancy in the economy, unabated imports of tyres from China and wild fluctuations in the foreign currency have added to its woes. There is overcapacity in the general purpose reclaim rubber and butyl reclaim rubber. The demand for reclaim rubber is robust particularly from the tyre sector. However, the tyre sector is pushing for better performing RRs.
The demand for reclaim rubber globally is inching up year after year. China is an aggressive importer of butyl reclaim, but has successfully forced the local industry to sell the butyl reclaim at uneconomic levels.
The trade war between China and the US has opened a window for export of reclaim rubber to USA. The wild fluctuations in foreign currencies has landed reclaim exporters in an unpredictable situation. On the one hand, reclaim rubber has become more like a commodity, on the other, those producers who see this as a special additive is able to carve out a niche market for itself.

What are the challenges faced by reclaim rubber industry?

The rising cost of scrap tyres for alternate use such as for pyrolysis, burning, cement kilns etc, has put intense pressure on availability and margins. In recent times, the energy cost has significantly increased and it has not been possible to pass on such legitimate increase in cost to customers because the prices of NR and SBR have remained sluggish. With requirements of IATF certification, individual RR manufacturers who wishes to serve the tyre industry is required to have in place processes and practices that will entail additional cost.

Has the reclaim rubber industry gone in for capacity addition in recent years?

There has been excess capacity among incumbent manufacturers, but there has been addition in capacity in newer technologies. With increasing radialization and availability of lower cost radial shreds being imported, processes to produce RR from radials are gaining popularity. Similarly, there is a shift in focus on cleaner processes of RR production from tyre and other synthetic rubber sources.
Going forward, the reclaim industry is likely to undergo downsizing or closure by uneconomic units, capacity consolidation and addition by larger size units having the resources in terms of technology, markets and management capabilities

What are the new technologies available for recycling waste products into usable, value-added products?

In recent years, several new technologies have emerged. These new technologies focus on:
• Ability of process to use newer material types (Radial tyres, Chlorobutyl tubes, EPDM, Latex waste, NBR etc.)
• Clean processes that are emission-free
• Shift from a batch to a continuous process;
• Shift from dominantly thermal to dominantly mechanical devulcanization processes.
On similar lines, there has been a lot of process innovations in allowing for incorporation of higher doses of recycled rubber (RR & crumb rubber included). This include mixing and extrusion equipment.
Adoption of any new technology is capital-intensive and risky as none of these new technologies have been commercially fully leveraged. Further, the tyre industry globally is weary of approving any reclaim rubber based on a new technology as it entails additional cost to them.
Having said that, there is no doubt that both the producers of RR and consumers will have to patiently work towards integrating new technologies in their respective domains. This is because of the changing pattern of availability of raw materials (radial tyres), new regulations (REACH/IATF etc), environmental awareness/regulations etc. Another challenge will be that, if a producer has a new proven technology, will the consumer adopt and accept such a product from a monopoly supplier?

How far has radialisation and the consequent fall in availability of end-of-life tyres affected the reclaim rubber industry?

The RR industry consumes about 40-45% of the EOL tyres generated in India. Even with increased radialization, there is enough bias tyre availability to suffice needs of the RR industry. The impact therefore on availability of materials is likely to be limited for the short to medium term. However, an increase in radial-based reclaim rubber is here to stay as these reclaims offer different set of properties over the bias based RR.
The industry is not fully geared up to handle such steel-belted radial tyres as high energy and robust equipment are required to pulverize such tyres and make them completely free of metal contamination. In the long term, the industry has to come to terms with this reality and take adequate steps to invest in such technologies.
This could pose a challenge to smaller reclaim rubber plants. The challenge will be to convince the consumer industry to integrate reclaim rubber produced from radial tyres in their formulations.

What is the impact of new entrants with limited resources and technical support on the reclaim rubber industry as a whole? Has it led to an unhealthy price war?

On account of favourable financial prospects, several new entrants have ventured into the RR industry between 2010-2014. Several of these capacities have shut down in the last few years and a consolidation has taken place. While the process for RR production has been easier to replicate, it did lead to an unhealthy price competition.
But it also led to a shake-up in the industry and a clear distinction has emerged between the technologically superior manufacturers who have evolved processes, introduced new products, moved towards automotive based certifications, and the unorganized RR producers who have found it even more difficult to survive.
The advent of GST has made further challenging for the unorganized to operate. I believe the RR industry has matured and is now a more mature, recognized industry with several focused players.

How far has fall in NR prices impacted reclaim rubber industry?

Historically, the prices of RR have been to a great extent linked with NR prices. So, when the NR prices was ruling above Rs. 200/kg, the RR industry was thriving. With the current NR prices at about Rs. 120 – Rs. 140/kg, and with excess RR capacity to handle, it is a no-brainer to assess how it has impacted the RR industry.

What are the future prospects of reclaim rubber industry?

While the last decade saw RR emerging as a popular choice of material on account of only economic benefits, the current wave of RR consumption is led by a long-term sustainability agenda. Producer responsibility and consciousness is a boardroom agenda and I believe this will drive future prospects of the RR industry. However, this new wave of growing RR usage will be accompanied with a significant pressure on the RR industry to a) upgrade product properties to meet enhanced tyre, rubber product properties, b) adopt cleaner processes, c) work with an organized self-reliant supply chain.

How far has the strategy of three R’s – Reduce, Reuse and Recycle – succeeded in checking environmental degradation?

I believe for India these are early days yet to implement this strategy. Its success will depend a lot on how effectively the government implements the solid waste management policy. There is growing awareness and desire in the industry (particularly the tyre industry) for the 3 R’s. But they, in turn, must ensure that the quality of their end-product does not suffer in their enthusiasm to implement the 3 R’s. There must be some strategic alliances and partnership between select tyre companies and RR producers to prove that through mutual cooperation, it is possible to implement the 3 R’s. I feel the government should provide some fiscal incentives (cashless) to encourage the producer and consumer industry to implement the 3 R’s. This is no doubt in the overall interest of the country.

Please explain about the present standing of GRP in the reclaim rubber industry and its road-map for the future.

GRP, over the years, has emerged as one of the largest producers of reclaim rubber globally with the widest range of products. GRP has been the pioneer in introduction of several new grades of reclaim rubbers. GRP relies heavily on investing in innovation and R&D, for maintaining this leadership position. GRP continues to focus on offering sustainable solution instead of selling a commodity.
While continuing to consolidate and build new capacities in reclaim rubber, GRP is also focusing on offering sustainable solutions in new areas adjacent to its current customer base. GRP is working on a strategic plan to offer better value-added reclaim rubbers with new grades and new processes/technologies. GRP has strong relationship with tyre companies both within India and globally. GRP works closely with them with the purpose of meeting their new requirements.

Any other points which you would like to highlight?

The demand for rubber products is steadily growing across the world. End-of-life waste rubber products are non-perishable. As new technologies emerge to produce newer types of rubber products, the need to improve technology for reclaiming such waste rubber products is also growing to ensure that these waste rubber does not add to environmental concerns. The rubber goods manufacturers, the reclaim rubber producers and the society at large need to imbibe the culture of the 3 R’s. In this, the government needs to provide enabling regulatory framework as well as incentives, both fiscal and non-fiscal, to succeed.