Jong-Hoon Baek, President International, IISRP
The global SR industry continues to drive on growth of the automotive and tyre industries which are undergoing major transformations towards autonomous, electrical, connected, and shared mobility, which means more opportunities for advanced materials. Also in the medical sector, design of high-tech materials is also opening up, challenging opportunities for the SR industry.
In an exclusive interview to Rubber Asia, Jong-Hoon Baek, President International, IISRP, says that against this backdrop, the synthetic rubber industry should focus on rapidly developing these new technologies and bringing them to the market quickly. He asserts that IISRP has the strength to achieve constant growth braving out all challenges on the way by continuously carrying out creative and innovative initiatives that can make the industry more competitive, more sustainable and more respectful of the environment every day. EXCERPTS:
At the very outset let us congratulate you on your election as the President International of the International Institute of Synthetic Rubber Producers (IISRP) for the year 2019-2020. Also thank you so much for sparing your valuable time for this interview to Rubber Asia, Asia’s premier international rubber industry magazine. While sincerely wishing you every success at the apex of IISRP, we would appreciate if you could briefly explain your priorities to take the global synthetic rubber industry and the IISRP to further heights.
First of all, thank you very much for your congratulations and good wishes. It is a great honour for me that your prestigious publication allows me to share my thoughts and ideas with your readers. As the new President International of the IISRP, I believe that consumption of synthetic rubber will continue to increase following the growth of the industries we serve; for instance, we provide products to the automotive and tyre industries, among others. Moreover, regional and global economic growth will also be an important driver of synthetic rubber (SR) consumption.
This positive outlook in the consumption of SR does not mean there are no difficulties or challenges along the way, which we must face. To respond to these new challenges, we realize more and more that we must be creative, innovative and competitive and that we must face them together, as a global SR industry and speak with a single professional voice. That is where the IISRP becomes a unique and fundamental piece since it offers all of its members that unique professional voice recognized worldwide, that can speak with all interested parties on behalf of practically the entire SR industry. That is my great responsibility today as the new President International of the IISRP, to lead that professional voice that represents our industry.
IISRP has an illustrious track record of championing the cause of the SR industry over the years.
What are the challenges being faced by the global SR industry, and how would IISRP like to overcome these challenges?
Our industry is a truly global business and has a presence throughout the world, and like all industries, we are affected by what happens globally. Today, the surplus production capacity of synthetic rubber continues to be one of the main problems we face. This is more noticeable in the types of elastomers used in the manufacture of tyres. This overcapacity has led to adjustments in the industry to balance supply and demand, but the situation is improving, and most of the SR products are showing solid growth during the past year.
Likewise, we are experiencing technological changes in many areas, such as industrial, commercial, and social, to give us more comfort and safety in our lives. These technological changes generate new needs, new challenges that can be converted into new business opportunities for us, the producers of SR. Concurrently, we also have some changes in world trade; in recent times, the global economy has been shaken by the protectionist measures implemented, which are changing the current state of the world trade dynamics. We also observe changes in environmental regulations in the countries and regions where we operate and market our products; these regulations are intended to protect us and protect our planet.
I think it is essential that members are informed of what is happening in the world especially as IISRP is a great source of market intelligence. The institute has a complete statistical program with monthly, quarterly, and annual reports that provide us with a very good overview of what is happening in the dynamics of the industry around the world. It also has an important technical program in which the research of our main raw materials is carried out in collaboration with the main universities of the world. We also have regional and global meetings where we discuss and review the action plans that we must take to strengthen our industry.
What are the emerging applications of SR, and what are the sectors where SR will have a cutting edge in the future?
The automotive industry is the main driver of SR consumption, and this industry is undergoing an important transformation towards autonomous, electrical, connected, and shared mobility, which means more opportunities for advanced materials. Also, medical applications and the design of high-tech materials are where new applications have also been developed. Therefore, the synthetic rubber industry should focus on a high-tech pace, to have the ability to rapidly develop these new technologies and bring them to the market quickly.
Innovation is the key to the survival of any industry. How is the global SR industry addressing the challenges of innovation with respect to technology and products?
I agree with you when considering that innovation is one of the key factors for the survival of any industry. In our case, innovation is a job that corresponds to each of the members of the IISRP and that is consistent with their respective strategic plans of each company. The Institute supports its members, as mentioned above, by providing intelligence. To this end, the IISRP has implemented a webinar program that includes topics related to new applications, new technologies, specialized rubbers, and outstanding speakers are invited to share their expertise on innovation and technological development both to develop our products and our production processes. In the same way, regional and global meetings are another element where we have invited speakers.
Price volatility of both SR and NR is a major concern. Also, the interrelationship between the two is quite obvious. We would appreciate your valuable comments.
The dynamics of the natural rubber market affects the synthetic rubber industry since we all know that there is a close interaction between the two types of rubber (natural and synthetic). When we have low prices for natural rubber, these low prices usually have an impact on the prices of synthetic rubber and also affect the consumption of SR. We see this more in the market segments of vulcanized products, such as tyre manufacturing, where the replacement will continue if the price difference goes too far and justifies the replacement. But we must bear in mind that performance can be the decisive factor in some applications or segments of the market. For example, the demand for high-performance tyres requires the use of synthetic rubber where natural rubber cannot achieve the performance needed.
Do you foresee any changes in the consumption pattern of SR vs. NR globally in the short/ medium/long term?
The iteration between these two types of rubber will continue. Now, I do not see a significant change in the purchase patterns of the market segments of vulcanized products that cause different market dynamics.
What is your outlook for the Asian market with respect to SR production and consumption?
The global SR industry continues to be a market dominated by the Asia Pacific region. It is the region that produces and consumes more synthetic rubber. Moreover, China remains an important force in the automotive industry, tyres, and rubber, and the performance of the Chinese economy affects the industry. The Asia Pacific region is the region where the excess capacity was more noticeable; today, the situation has gradually improved. We believe that this challenge is due to two main factors: Over investment in China and the greater capacity of SSBR & BR (due to the demand for high-performance tyres and ecological tyres). However, China has already taken some measures to stop over investment and work more to introduce specialized products and be more innovative. In addition, greater capacity additions are not expected in tyre elastomers. But where we expect capacity additions, it is with the SBCs where expansion plans and new short-term projects are forecasted, mainly in the Asia Pacific region. In the long term, we expect emerging Asia to continue to drive growth in the passenger vehicle segment. As a result, the tyre market for light vehicles and the synthetic rubber market will continue to expand.
Any other points you would like to highlight?
Regarding the future of the industry, we have a positive outlook, on the growth of our industry and the consumption of synthetic rubber. However, the prospects depend on a significant level of uncertainty, which includes the chaotic evolution of the financial markets, the growing protectionism in global trade, and the increase in geopolitical tensions. Of course, we will have challenges and difficult moments along the way, but I believe we have the strength to overcome them to achieve constant growth. This requires a continuous effort to find and carry out creative and innovative initiatives that make the industry more competitive, more sustainable, and more respectful of the environment every day.