COVID-19 Impact on Synthetic Rubber in Chemical and Materials Industry
INTRODUCTION
Rubber products are commonly used in day-to-day life activity. Synthetic rubber is the type of an artificial elastomer. The first synthetic rubber was created by Neoprene which is known as Polychloroprene in 1930 by a DuPont chemist. Synthetic rubber has the property of resistant to gas and oil due to which synthetic rubber is widely used in industrial machinery and automotive industries. In the 1930s, scientists from Germany created another form of synthetic rubber using co-polymers. During World War II, Japanese access to natural rubber was cut off in the South Pacific which increases the need for an alternative product and so natural rubber became necessary in the country due to the lack of access to natural rubber raw material or products, synthetic rubber was being used in various manufacturing and industrial sector. With the increasing popularity of synthetic rubber products, its application increases and has become the norm for most of the industries.
Synthetic rubber is made from the polymers synthesized which are the by-products of petroleum. Synthetic rubber has several properties as the products are solid, flexible and durable for longer duration. Synthetic rubber can easily be shaped into any form when heated and become strong when cools down. As synthetic rubber products are made from several elastomers mixtures which help to increase the strength of the synthetic rubber and make products resistant to heat, light and from different chemicals. Synthetic rubber when added to the other products during manufacturing makes the product heat as an electrical insulator.
Synthetic rubber is different from the natural rubber as natural rubber is a polymer that is derived from tree sap. The sap is exposed to natural air and temperatures which make natural rubber harden in nature. The nature rubber is heated with the sulfur and no other chemicals are added to the natural rubber products. Synthetic rubber is manufactured under factories under different processes which include the use of different catalysts to create the polymer. Different chemicals and compounds are used to make up different forms of synthetic rubber which are used for several applications in industries.
Synthetic rubber is manufactured from the raw material which is derived from petroleum, coal, oil, natural gas, and acetylene and many of them are the co-polymers. Naphtha is produced during the refining process of the synthetic rubber. The naphtha product is extracted which can be mixed with natural gas to create more monomers such as styrene and isoprene which are essential for synthetic rubber manufacturing. Synthetic rubber products are of different types and have the different chemical properties and used in several applications. Styrene-butadiene rubber and butadiene rubber (both of which are buna rubbers) are commonly used in tire production which are used in the automotive industry. Synthetic rubber are used in several applications which are tires, clutches, engine bearings, conveyor belts, industrial goods, seals for drinking water and another type of acrylonitrile butadiene rubber (NBR) is used in industry for the heavy duty applications as the product is resistant to fuel and oil, has good temperature properties and is resistant to abrasion.
The different types of the synthetic rubber are:
- Acrylic Rubber (ACM)
- Butadiene Rubber (BR)
- Butyl Rubber (IIR)
- Chlorosulfonated Polyethylene (CSM)/ Hypalon
- Ethylene Propylene Diene Monomer (EPDM)
- Fluoroelastomers (FKM)/ Viton
- Isoprene Rubber (IR)
- Nitrile Rubber (NBR)
- Perfluoroelastomer (FFKM)
- Polychloroprene (CR)/ Neoprene
- Polysulfide Rubber (PSR)
- Silicone Rubber (SiR)
- Styrene Butadiene Rubber (SBR)
IMPACT ANALYSIS OF COVID-19 ON SYNTHETIC RUBBER MARKET
The COVID-19 have created the pandemic situation in all over the word due to which the economy of all the regions have been affected on the larger extent and will recover in very steady pace. No sector such as manufacturing and automotive is immune from the effect of the COVID-19, all the manufacturers in the regions have faced the ups and down in the business due to the COVID-19 situation and unable to forecast the demand of the products. The government and the higher authorities have taken strict actions for lowering the spread of the COVID-19 which has resulted in the lockdown in the countries and halt in the production of the finished goods. The pandemic have hit the economy very hard worldwide as the lockdown was imposed in all the regions which have made the situation challenging for all sectors for growth and also the developing activities would be done in the different stages.
Manufacturers have faced several problems in the production of the synthetic rubber due to the disturbance in the supply chain of the raw material due to the COVID-19. The demand of the synthetic rubber in industries got declined by 15%-17% approximately due to lower demand by the tyres manufacturers in the global market. The activity of the stock lifting from tyres factories and transporting the inventory to auto manufacturers globally came to a standstill after the government of different countries announced a lockdown due to the COVID-19. The demand of the synthetic rubber has fallen in the industries due to the lower production of the finished goods which resulted in the fall in the price of the synthetic rubber in the global market. The export and import of the synthetic rubber in different countries have fallen down due to the pandemic situation created by COVID-19.
Synthetic rubber products are more used in the tires productions which are used in the automotive industry. The tires are used in all kinds of the vehicles from light weight to heavy duty vehicles but due to the spread of the COVID-19 in the countries, the transportation have declined due to which the demand for synthetic rubber in tyres industry have fallen down. The demand of the tyres have fallen down in the automotive by 37%-40% approximately due to which the demand of the synthetic rubber has fallen down. The tyres manufacturers also producing at 20%-25% of their total capacity due to lower demand by the global automotive market during the period of the COVID-19 which has resulted in the lower demand of the synthetic rubber.
Large as well as small industries have faced the problem for the production of the synthetic rubber products as skilled labor is required for the production of finished products from synthetic rubber. All the labor have moved to different places which have created a challenge for the manufacturers during the COVID-19 situation which has also affected the demand of the synthetic rubber globally. Synthetic rubber are also used in several industries such as foot wear but due to the lock down, the demand of the synthetic rubber was also fallen by 28%-30% in the foot wear industry. The increasing demand of the automotive spare parts and production in the automotive industries will increase the demand for the synthetic rubber globally and also the increasing demand of the footwear globally will help to boost synthetic rubber market after the COVID-19 period.
IMPACT ON END-USERS OF SYNTHTIC RUBBER PRODUCTS
IMPACT ON AUTOMOTIVE INDUSTRY
The automotive industry has been hit sharply by the COVID-19. The production of the automobiles has been on halt since the demand of the spare parts of the automobile have declined. The most important thing in the automobiles is the tyres of the cars or the two-wheelers but due to the lockdown the production of the automobiles have declined due to which the demand of the tyres by the manufacturers have also declined and thus the manufacturers have to face losses which resulted in the decline of the growth of the synthetic rubber in the global market. Automobile industries are running at losses due to the COVID-19 outbreak and delaying the production of the new models and also in launching of the new models.
For instance,
- The delay in the launch of BMW X1 facelift electronic car was planned in March in India
- ETAuto got delayed or postponed due to the coronavirus crisis and the lockdown uncertainties
- Mercedes-Benz EQC 400 electric SUV delayed its launch due to the spread of coronavirus
- General Motors is delaying the upcoming reveal of the new all-electric Hummer truck because of the COVID-19 pandemic
- The delay in the launch of Volkswagen T-Roc electronic car was planned in March in India
European automotive sector have faced unexpected crises as BMW and Volkswagen concentrated on their new products instead and Euro Temporary closures of plants and industries has been accounted by European Automobile Manufacturers’ Association (ACEA) due to collapsing demand of automobile in the region, supply shortages due to supply chain disruptions with other regions. Society of Indian Automobile Manufacturers (SIAM) also declares that the auto industry will result in estimated loss of USD 23,000 million loss per day due to lockdown.
FIGURE 1 LIGHT VEHICLE SALES, FEB 2019 VS. FEB 2020 (IN THOUSAND UNITS)
From the above chart, we can infer that the demand of the light vehicles have declined in several countries as in China, the sales of the light vehicle was 1300 thousand units in February 2019 which gets declined to 100 thousand units in February 2020. In Japan, the sales of the light vehicle was 350 thousand units in February 2019 which declined to 300 thousand units in February 2020. In South Korea, the sales of the light vehicle was 620 thousand units in February 2019 which was declined to 120 thousand units in February 2020. As the sales is declining resulted in the lower production in the automotive industry which leads in the decline in the demand of the tyres and the demand of the synthetic rubber fall in the global market.
IMPACT ON FOOTWEAR INDUSTRY
Synthetic rubber are more used in the footwear industry as it is easy to fold and cut due to the property of flexibility which increases its demand in the foot wear industry. The cascading effect of the spread of the coronavirus can also be seen on the footwear industry. Footwear industry also have to face the pandemic situation created by the COVID-19. The production in the footwear industry has been on halt due to the lock down and shortage of the labor in the factory. The demand of the footwear on all distribution channels have declined globally due to which manufacturers have to face the challenge of the stock clearance. Synthetic rubber is used in the manufacturing of the sole of the footwear. The decline in the demand of the footwear has resulted in decline in synthetic rubber during the COVID-19.
Several manufacturers have to face the loss of revenue due to the lower demand of the footwear during the COVID-19 which is near to 38%-45% due to which the production of the footwear have been slow in the COVID-19 period which decline the demand of the synthetic rubber. The exports of the footwear have declined near to 37% during the COVID-19 period which lowers the revenue generation for the footwear manufacturers.
IMPACT ON PRICE OF THE SYNTHETIC RUBBER PRICE
FIGURE 2 PRICE OF SYNTHETIC RUBBER (JANUARY 2020 – JULY 2020) (USD)
From the above diagram, we can infer that the price of the synthetic rubber is falling on constant rate as due to the fall in the demand by the automotive, tyre and footwear industry. The price of the synthetic rubber in January 2020 was USD 150.80 which fall to USD 132.00 in the month of April 2020, when the lockdown have increased, the production activity have fallen down due to which the demand of the synthetic rubber have fallen down. In the month of May 2020, the price was USD 120.10 which have again fallen to USD 114.10 in the month of July 2020.
CONCLUSION
The COVID-19 crisis has created the pandemic situation widely which has affected the growth of the synthetic rubber market as the demand in the tyres, automotive and footwear industry have fallen down in all over the world. As the government imposed lockdown rules for all the manufacturing due to which manufacturers were not able to produce the synthetic rubber for the specific application as the raw material for the product is not available easily due to the disturbance in the supply chain which lead to the huge loss to manufacturers and will show a steady growth in coming years. The price of the synthetic rubber have fallen down due the lower demand in the market as the import and export of the finished goods and raw material have become difficult in the COVID-19 situation.
Lock down for more than 3 months in the countries have resulted into the declining of the demand of the synthetic rubber in the tyres and automotive industry during the COVID-19. With unlocking of the regions and countries, the demand of the automotive, tyres and the footwear industry will increase which will help to boost the demand for the synthetic rubber globally.
