Michelin has invested US$55 million for a 47 per cent share in a joint venture with the Barito Pacific Group (BPG). The two parties will work in Indonesia on the production of natural, eco-friendly rubber in a project that involves the reforestation of three concessions that were previously ravaged by uncontrolled deforestation, a total area of 88,000 hectares.
The Yokohama Rubber Co., Ltd., established a Singapore subsidiary called Yokohama Rubber Singapore Pte. Ltd. in April. The new subsidiary, capitalized at US$20 million (all equity capital from Yokohama Rubber), is scheduled to begin full operations from mid-May.
The Secretariat of the International Rubber Study Group (IRSG) has published its annual report, which suggests total world rubber demand will increase at 1.8 per cent and 4.1 per cent in 2015 and 2016 respectively. This is below the long-term growth rate of 3.7 per cent under the IMF Scenario (the report refers to three scenarios – IMF, downside and oil price) to 29.1 million tonnes in 2015 and to 30.3 million tonnes in 2016.
Regional government ministers in India met with tyre makers on 18 December to discuss rubber prices. Chief minister of the state of Kerala, Oomen Chandy has chaired a meeting which proposed a minimum guaranteed price for rubber growers – a price of around Rs 125 to 130 (£1.25 to £1.30) per kilogramme was suggested. In recent times the price paid to Indian rubber growers has dipped as low as Rs 90 per kilogramme, a price considered unsustainable.
The Thai government is buying rubber from the market via a 6 billion baht (US$183 million) buffer fund to support prices. According to a Reuters report, a private fund has also been set up to support domestic rubber futures.
Asia is an enticing part of the world for many tyre makers, including Apollo Tyres, which has stated its desire to make inroads there. A small but significant step it has taken into the region is the relocation of incumbent president and chief financial officer Sunam Sarkar to Singapore. Sarkar’s arrival will likely be followed by the establishment of an office in the city state, and – although Apollo hasn’t yet made any official announcement to this effect – he seems the logical choice to oversee the operation set up there. A secondary function of Apollo’s new presence in Singapore will be to aid its sourcing of raw materials in Asia; the subject of rubber is a high profile one for tyre makers in India, and despite the higher duty affixed to natural rubber compared to finished tyres, manufacturers rely heavily on imports of this raw material.
A group of “leading rubber processors from China” are set to visit Thailand, Indonesia and Myanmar to survey sites to establish rubber plants in the next week or so. Thailand’s The Nation reports that about 10 rubber processors from Shandong province and representatives from the China Council for the Promotion of International Trade are scheduled to visit Indonesia, Myanmar (Burma) and Thailand between 19 and 25 November.
The group reportedly consists of around 50 representatives from both companies and government agencies. It will reach Thailand on 23 November where it will stay for two to three days with a view to considering “opportunities to invest in the South and Northeast, the country’s major rubber tree growing areas”.
The organisation representing India’s tyre makers has called upon its national government to encourage rubber replantation and offer rubber growers subsidies to plant new trees. According to news published by the Press Trust of India, the Automotive Tyre Manufacturers’ Association (ATMA) wants these measures implemented in order to address the reluctance of growers to plant new trees, which can’t be tapped for their first six to seven years. Without encouragement, the ATMA fears growers will continue to tap older, lower-yielding trees; the association comments that this practice is profitable for growers due to the high prices natural rubber currently commands.
US-based bioscience company PanAridus recently announced granting of its ninth US Department of Agriculture (USDA) plant variety patent and the first tyre quality, bale-sized shipment of its guayule-derived biorubber. The announcement was made by company CEO Mike Fraley at the recent International Tyre Exhibition and Conference in Akron.
The ribbon was cut on Bridgestone Americas’ brand new Biorubber Process Research Center on the morning of 22 September, and with the official opening of this Mesa, Arizona-based 10 acre (4 hectare) research and innovation centre, the company moves a further step forward in its efforts to extract natural rubber from guayule.
Dr Hidde P Smit, former secretary general of International Rubber Study Group (IRSD) and rubber market analyst, has suggested tree-felling and reduced tapping in order slow falling rubber prices.
Delivering the key-note address at the sixth edition of India Rubber Summit & Dinner 2014 organised by Rubber Asia in Kochi, India on 21 September 2014, he predicted that the low price regime could continue for the rest of the decade and even beyond. He said any intensive rubber planting done now could lead to a glut in natural rubber (NR) market after six years, bringing the prices down further. He added that world NR consumption is expected to touch 18.6 million tonnes by 2025, while NR supply may exceed demand at 19.3 million tonnes by 2025 and 20.2 million tonnes by 2030. However Indian market representatives disagreed, pointing to the Indian example and suggesting the rising supply deficit could be bridged only by boosting production.
Sinochem International Corporation subsidiary Sinochem International (Overseas) Pte Ltd. has Bought a 51 per cent stake in Singapore-based natural rubber producer GMG Global Ltd. for SG$ 267.98 million (£106.4 million). GMG operates natural rubber business in Africa and elsewhere with plantations in Cameroon and Ivory Coast and processing facilities in Indonesia. Amongst other things Sinochem International expects the deal to help position it for growth in the global rubber market. China contributes to over 20 per cent of the world’s natural rubber consumption but only produces 7 per cent of the production.
It seems that the announcement by Kumho that it is to spend US$155 million on building a factory at Binh Duong in Vietnam (30th April) is only part of the whole story.
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