NATURAL AND SYNTHETIC RUBBER MARKET OVERVIEW Price change percentages since January 2011 Natural Rubber China, SIR-20 Crude Oil Butadiene
45%
2012
2013
-5%
2011
Price change percentage
95%
Jan 11
Jan 12
Jan 13
-55%
Source: Propurchaser.com
Natural and synthetic rubber market update Natural and synthetic rubbers are used extensively in the healthcare industry for exam and surgical gloves. Natural rubber is derived from latex sap extracted from a rubber tree, while synthetic rubber is synthesized from chemicals that result from petroleum refining.1 Several important trends are expected to impact natural and synthetic rubber pricing in 2013: > Automotive sector: Almost 60 percent of global rubber is used by the world’s tire manufacturing industry, with the remainder serving other sectors, such as transportation, construction, healthcare, and mining.2 Scotiabank Groupforecaststhatglobalautomotive sales will climb to more than 64.7
million units in 2013, marking a 10 percent increase over 2011. This is strengthened by strong employment growth in developing nations and low global interest rates and monetary expansion.3 In its Global Auto Report, released in December 2012, Scotiabank Group cites significant growth in China, Brazil, Russia, Japan, and the United States. The report says China is “the key driver of global car sales, accounting for nearly 60 percent of the increase in world volumes over the past decade.” This growth will continue, as more than 20 million people relocate to China’s urban areas each year. One key growth driver in the U.S. is vehicle replacement, which will send U.S.salestothehighestlevelssince2007.4
> Nitrile rubber prices under downward pressure: Synthetic nitrile butadiene rubber (NBR), a major component of exam gloves, is composed of more than 65 percent butProduct categories with high rubber content and 12-month price outlook adiene (BD). BD prices reached record highs in Exam gloves ■ 2011andhavenowfallen Surgical gloves ■ 55 percent since their peak. BD, historically Price increase risk: ■ High ■ Moderate ■ Low the key contributor to
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high NBR prices, is now experiencing low demand due to macroeconomic conditions. ICIS, the world's largest petrochemical market information provider, reports that BD producers are not increasing costs to key users due to the poor global economy. 5 NBR producers in China, Japan, and South Korea have lowered production output, and according to ICIS, “NBR prices are expected to remain under downward pressure, given the weak demand, oversupply, and expectations of a downtrend in feedstock prices.” 6 Despite the current conditions, future demand may push prices higher. Global NBR demand, estimated at $1.7 billion in 2010, is expected to reach $2.7 billion in 2018, growing at a compounded annual rate of 5.9 percent.7 > Natural rubber latex prices falling: Thailand, Indonesia, and Malaysia are the world’s top natural rubberproducing countries. Natural rubber prices have fallen by 47 percent since they peaked in February 2011. Sheela Thomas, chairman, Rubber Board, says: “The trend is mainly a result of the growing concerns about world economy, particularly in the light