Chemical demand to rise 4.2%. (Market Focus).

Worldwide demand for rubber processing chemicals will increase 4.2% per year through 2006, according to a new study by The Freedonia Group. The Cleveland-based research firm says sales will go from the $685.5 million reported in 2001 to $842 million in 2006. The study projects consumption to reach 842,000 metric tons.

By 2006, almost four parts of processing chemicals will be consumed for every 100 parts of rubber, up slightly from 2001 levels due to robust growth in non-tire rubber consumption and the continuing popularity of performance and large SUV-type vehicles, whose tires require more intensive use of rubber chemicals.

The Asia/Pacific region, excluding Japan, will post the most impressive gains in rubber processing chemical demand through 2006. China will lead the way with sales increasing 6.1% per year, from $104 million to $140 million. The other Asia/Pacific nations will see an increase in sales from $116.5 million to $153 million, a 5.6%, increase annually. Japan's rubber processing chemical industry is projected to grow at a 1.7% annual rate through the period, which is an improvement from the declines posted in the 1996-2001 period. Freedonia says Japan will continue to face intense competition in both motor vehicles and tires in many of the nation's traditional export markets, which will adversely impact domestic consumption of rubber chemicals.

The North American market is expected to perform well, although annual gains will be somewhat exaggerated because of a poor performance in 2001, when sales totalled $152 million. That mark was lower than the $157 million posted in 1996. Freedonia predicts the North American market to grow 4.5% per year to a total of $189 million in 2006.

The West European market will exhibit the weakest gains among all regions, reflecting a stagnant outlook for the region's motor vehicle industry and population levels. The region is expected to increase demand by almost 2% through 2006, when sales are projected at $154 million.

Although the developing Africa/ Mideast and Eastern Europe regions will register strong growth, rising almost 5% per year through 2006, the Asia/Pacific, North American and Western Europe regions will continue to dominate global rubber chemical processing consumption, collectively accounting for 85% of the market in 2006.

Antidegradants are projected to see the most rapid gains among all functional chemical types, with demand in creasing 4.4% per year through 2006 to 450,000 metric tons. The demand will come from both expansion in tires and industrial rubber products as, well as efforts to lengthen service lives of rubber products. Accelerator demand will approach 300,000 mt in 2006.

ubber processing chemical demand

                                       (Million dollars)
                                     1996     2001     2006

Rubber processing chemical demand   600.5    685.5   1842.0
  North America                     157.0    152.0    189.0
  Western Europe                    116.0    140.0    154.0
  Japan                              74.9     74.5     81.0
  China                              62.8    104.0    140.0
  Other Asia/Pacific                109.8    116.5    153.0
  Rest of world                      80.0     98.5    125.0

                                        % annual growth
                                        01/96    06/01

Rubber processing chemical demand        2.7      4.2
  North America                         -0.6      4.5
  Western Europe                         3.8      1.9
  Japan                                 -0.1      1.7
  China                                 10.6      6.1
  Other Asia/Pacific                     1.2      5.6
  Rest of world                          4.2      4.9