Rubber industry battles drop in demand as lockdowns hit orders
Industry in ‘crisis’ as orders from tyremakers such as Bridgestone dwindle
Mumbia — Global production of natural rubber is likely to fall by nearly 5% in 2020 as the coronavirus pandemic has depressed demand and put the industry in crisis, the Association of Natural Rubber Producing Countries said on Tuesday.
The association, which at the beginning of 2020 forecast that both production and demand would rise in 2020, now sees output falling — particularly in Indonesia, the world's second largest producer — due to the economic impact of the coronavirus and the hit to the car industry.
“The outbreak of the Covid-19 pandemic has put the world rubber industry into one of the worst crises in the past few decades and has pushed the stakeholders in the whole value-chain into chaos,” RB Premadasa, secretary-general of the association said in a statement.
Demand from car tyremakers such as Bridgestone, the world's biggest, has dwindled as car manufacturing slumped due to the pandemic and the Japanese company suspended operations at some plants in late April and early May.
The association expects Indonesia's rubber output to drop 12.6% to 2.9-million tonnes in 2020, while top producer Thailand will see production fall by nearly 1%.
While the association said there has been a spike in demand for rubber gloves and other protective equipment during the pandemic, that is offset by a plunge in demand from the car and other industries.
As a result it expects global production to fall by 4.7% to 13.13 million tonnes this year. At the beginning of the year, it forecast 3.8% and 2.7% rises in production and consumption respectively. Now it sees demand falling by 6% to 12.904 million tonnes.
Natural rubber imports by China, the world's biggest consumer, could fall by 5.1% from a year ago to 4.8 million tonnes, it said, while demand in India — the No. 2 consumer and also a major producer of rubber — is set to plunge by 21.3% due in part to a lockdown of its car industry during the pandemic.