The New Crown Pandemic Affects The Entire Rubber Industry In 2020

- Dec 16, 2020-

In 2020, which is about to pass, the global hot spots must mention the "new crown pandemic" and "new crown pneumonia". The pandemic public health events will run through 2020 and even 2021. The impact on the entire rubber industry will hardly be restored in the short term. Tire production stops, rubber gloves demand soaring, global emergency orders, etc., the structure of downstream rubber demand has undergone significant changes.

1. Tire companies close some factories

In March 2020, the new crown pneumonia epidemic broke out globally, and many world-renowned tire companies announced the closure of their factories. Goodyear said on March 17 that it is closing its business and has closed its European, North American and South American factories. Michelin temporarily closed its factories in European countries most affected by COVID-19 on March 19, and subsequently disclosed the phased suspension of production in the United States and Canada. Bridgestone initially closed its North and South American plants and then took similar actions in Europe.

Apollo Tire Co., Ltd., Continental Group, Cooper Tire & Rubber Co., Ltd., Hankook Tire Technology Co., Ltd., Kumho Tire Co., Ltd., Nokia Tire Co., Ltd., Pirelli, etc. have temporarily suspended production at global factories.

2. Facing supply chain disruption

As the epidemic situation becomes more and more severe, the demand for automobiles is getting lower and lower, and the tire replacement rate is decreasing. Major foreign economies have almost shut down, export trade has shrunk, and insufficient orders have caused domestic companies to once again fall into a shutdown or semi-stop state. The global economy recovered from July to September; the summer brought strong sales of replacement tires and automotive aftermarket.

3. Demand for medical gloves surges and orders are delayed

The new crown pneumonia epidemic has caused a surge in global demand for medical gloves. As of the first three quarters of 2020, the export volume of latex gloves in Thailand increased by 34.9% year-on-year, of which the export volume of medical gloves increased by 61.6% year-on-year, in sharp contrast with the average growth rate of only 0.3% in 2014-2019; the export volume of Thailand's concentrated latex increased by 3.3 %, while the export volume of cigarette film and rubber block fell by 25.9% and 37.4% in the same period. Malaysia's top glove company has been in emergency for many times, and gloves orders are scheduled to next year.

4. The demand pattern of rubber demand has changed

With the increasing orders for latex gloves, the demand for concentrated latex has surged. Most rubber products are still of low quality and cannot replace the cup glue of concentrated latex. In terms of other rubber raw materials, due to the stable and controllable quality of rubber blocks and meeting higher performance requirements, Chinese tire manufacturers are turning to more rubber blocks as raw materials, resulting in a gradual decline in demand for smoked film. For Malaysia and China, the main producing areas of medical gloves, synthetic rubber has advantages in price. Natural latex has skyrocketed due to weather and epidemics, making the replacement of synthetic rubber occurring.

As American residents return to the highway one after another, demand for tires is rising, which is good news for the replacement tire market. However, judging from the development trend of the global health industry, the global demand for latex gloves will continue to grow, and the reduction in demand for automobiles and tires will be difficult to change in the short term; the traditional downstream demand pattern for rubber has been quietly broken.