World demand for nontire rubber outpacing tire rubber.

According to a new study from The Freedonia Group, Cleveland, OH, growth in world demand for nontire rubber will outpace tire rubber due to strong opportunities for mid-range elastomers such as EP/EPDM, nitrile and polychloroprene in industrial rubber products such as hoses, belts, gasketing, weatherstripping, liners and roofing for both industrial and automotive markets. The major tire elastomers, styrene-butadiene (SBR) and polybutadiene (BR), will benefit from recovery in light vehicle production and per-capita vehicle ownership levels in developing regions. Furthermore, industry analyst Paul Ita, author of the study, concludes that natural rubber will see good growth due to recovery in its major application, tires, as well as continuing strong growth for latex in medical rubber goods such as examination gloves. Overall, world demand for rubber will increase 3.2% per year to reach 17.3 million metric tons in 1997 from a depressed 1992 base.

Through 1997, tire sales are forecast to rise 2.9% per year to just over one billion units. The OEM segment will pace gains, with sales in this segment reaching 327 million units in 1997 due to the recovery of motor vehicle production levels. "Favorable trends in the tire industry include the growing popularity of performance tires in developed nations (particularly the U.S.)," says Ita, "as these tires require larger quantities of elastomers in their construction and have shorter service lives relative to all-season radials." On the other hand, ongoing automotive downsizing trends and desires to reduce rolling resistance (to increase mileage) will continue to favor lighter and smaller tires, which will reduce the amount of elastomer required per unit.

Replacement tire sales will benefit from steady growth in the number of vehicles in use, especially in industrializing nations. Increases will average 2.7% annually to reach 689 million units in 1997 and remain the dominant component of tire sales. Factors limiting growth in the replacement market include longer tire service lives based on improved designs and materials, and slower growing motor vehicle parks in developed countries.

Global tire output will continue to be dominated by the traditional tire producing nations of the U.S., Japan, France and Germany, as well as the former Soviet Union, Italy and the United Kingdom. However, Ita foresees that recent newcomers such as South Korea, China and Brazil, all of which have become major tire exporters over the last decade, will also join the ranks. The developed nations are expected to experience tire production growth in line with their highly mature motor vehicle industries, while developing nations will enjoy vibrant growth and rapid capacity expansion through the end of the century. Gains in developing areas will be driven by factors such as advantageous labor costs and rising needs for burgeoning indigenous motor vehicle industries.