Rubber consumption to grow 4% through 2006. (Market Focus).

World rubber consumption is forecast to increase 3.8% per year to 21 million metric tons in 2006, according to a new study by the The Freedonia Group. The gains will be arising from a relatively weak 2001 base, particularly in the large U.S. market, the Cleveland, OH-based industrial market research firm said.

Rubber demand will directly benefit from solid growth in world motor vehicle production, as well as a stronger global economy. As has been the case over the last decade, the strongest gains are forecast for China, though the double digit annual gains that characterized China's rubber market throughout the 1990s are forecast to slow significantly as its domestic market matures and motor vehicle production decelerates. The Chinese market will be sustained primarily by expanding demand for industrial rubber products such as hoses, belts and gaskets, offsetting a slower outlook for tire rubber. Above-average gains are also forecast for other developing Asia/Pacific countries such as India and Taiwan, as well as Africa/Mideast and Eastern Europe.

Among the major developed regions, the large North American market will post gains in excess of the global average, rare for well developed, mature markets such as this. However, this performance follows a sustained drop in U.S. rubber demand in 2001 in response to a weaker economy and a similar drop in motor vehicle output. Regional gains through 2006 will be bolstered by a recovery in U.S. demand, as well as the continued evolution of the Mexican rubber market, where demand is linked to rising motor vehicle production and industrial activity.

Both Western Europe and Japan will post gains that are well below average. For Japan, though, this forecast represents a moderate recovery from the declines that have characterized the country's rubber market over the last decade. The western European market by contrast, is rising off a stronger 2001 base, but future demand will feel the adverse effects of a stagnant outlook for the region's motor vehicle industry.

Non-tire rubber will outpace tire rubber demand through 2006, based or a favorable outlook for mid-range elastomers (e.g., ethylene-propylene, nitrile and polychloroprene) used in components such as hoses, belts, gaskets and weatherstripping. The non-tire rubber market also will benefit from the continuing popularity of sport utility vehicles (SUVs), which consume more non-tire rubber per vehicle. Tire rubber demand will benefit from the popularity of performance tires (a trend also related in part to the popularity of SUVs). Performance tires use more rubber than all season-radials and also have shorter service lives, thus stimulating replacement demand.

World Rubber & Tire is available from The Freedonia Group, 767 Beta Drive, Cleveland, OH.

World rubber consumption (000) metric tons

                                                      % annual growth
                            1992     2001     2006      01/92   06/01

Total rubber consumption   15,671   17,520   21,140      2.3     3.8
  United States             3,188    2,967    3,615     -1.4     4.0
  Canada and Mexico           597      593      730     -0.1     4.2
  Western Europe            2,920    3,455    3,710      3.4     1.4
  Japan                     1,840    1,797    1,925     -0.5     1.4
  China                     1,680    2,720    3,570     10.1     5.6
  Other Asia/Pacific        3,266    3,388    4,380      0.7     5.3
  Other world               2,180    2,600    3,210      3.6     4.3