Is the Rubber Industry Set for a Major Overhaul?

Rubber, or natural rubber extracts from the tree species, Hevea brasiliens, through a process called ‘tapping’. The process begins with an incision that is made in the bark of the tree and latex milk is collected from it. Once the milk is collected, it is put through advanced processes, depending on how the milk is to be used. About 70% of the latex milk is used in automotive tire manufacturing and the rest is used in other end-user industries such as textiles and construction.

Since the tree grows well in a tropical humid climate, the majority of the world’s rubber production occurs in South and Southeast Asia. According to the Indian Ministry of Commerce, Thailand, Indonesia, Malaysia, Vietnam, China, and India are the largest rubber-producing countries in the world. 

In the past few years, rubber demand and production have shown discouraging signs worldwide. For instance, estimates released by the Association of Natural Rubber Producing Countries (ANRPC) reveal that in the first half of 2019, global natural rubber production declined by 7.3%, reaching 7.039 million tons from 7.591 million tons in 2018. A large portion of this fall is due to the wildly fluctuating crude oil prices which have disrupted the production of synthetic rubber used in industrial applications.

The other reasons include erratic climate shift, move towards sustainability, and the Pestalotiopsis outbreak in Indonesia. However, notwithstanding this bleak scenario, government-backed initiatives in some of the top rubber producing countries are expected to rejuvenate the global rubber market.

Thailand 4.0: Opening New Avenues for Investment

According to the Board of Investment of Thailand, in 2017, rubber production in Thailand accounted for 36% of the world’s rubber production, surpassing 4.56 million tons in volume. The country exported 3,662,154 metric tons of natural rubber in 2017, the majority of which went to China. The Thai government launched its landmark ‘Thailand 4.0’ initiative in late 2018 with a view to promoting innovation and research and development into green technologies to attract investment into the country. With regard to the domestic rubber industry, the government hopes to widen the production of different types of rubber through this measure.

In particular, it seeks to enhance the employment of rubber in the medical field, such as in the production of medical gloves, IV tubes, and condoms. The government also plans on incentivizing investment in rubber products in the automotive and aviation industries. Thus, the Thailand 4.0 plan will bode well not just for the domestic market, but also for the market in Southeast Asia in the next couple of decades.  

India’s National Rubber Policy to Create Lucrative Growth Opportunities

The Government of India released its National Rubber Policy in 2019 in a bid to infuse new energy into the lethargic rubber industry. India produces about 5% of the world’s rubber, with a production capacity of 900,000 tons, as per Ministry of Commerce estimates. Under this policy, the government has allowed 100% Foreign Direct Investment (FDI) in rubber plantations, paving the way for a new era of development for the domestic rubber industry. Strengthening of existing rubber procurement and manufacturing infrastructure, promotion of Self Help Groups (SHGs) and Rubber Producers societies, companies, and cooperatives, and exploration of new areas for rubber cultivation are also the focus areas of the central and state governments.

More importantly, the new policy aims at enhancing R&D capacities to tackle the challenge of climate change that can jeopardize India’s rubber production capacities in the foreseeable future. 

Many companies are taking advantage of such supportive government programs and policies. 

Halcyon Agri Launches BOUNCE Movement

Singapore-based Halcyon Agri Corporation Limited launched the BOUNCE initiative in December 2019, touted to be the world’s first movement for sustainable rubber. The movement aligns with the UN’s Sustainable Development Goals (SDGs). Under BOUNCE, Halcyon plans to call to action major manufacturers, suppliers, and other stakeholders to develop and adopt sustainable practices in the production of natural rubber. The ultimate goal of BOUNCE, according to the company, is to make the rubber industry more equitable, with paying rubber farmers their basic minimum wage being the starting point.    

Max Group Takes Over India’s Biggest Rubber Manufacturer

In March 2019, Max Group, a leader in Hydraulic, Rotary, and Pneumatic seals declared its acquisition of India’s largest rubber manufacturing company, The Rubber Product Limited. Through this takeover, Max took a step closer to the integration of its diversified manufacturing units with innovative rubber products. Having a large customer base comprising numerous government organizations such as the DRDO, the move will also help the company expand its presence in India’s burgeoning manufacturing sector. 

What Lies Ahead?

Rubber is an essential raw material for the industrial development of any country. The center of gravity for the rubber industry has always been Southeast Asia and it does not appear that it will shift anytime soon. As the major rubber producing countries formulate policies and schemes to uplift their respective rubber industry, the global market will continue to prosper. The above are but a few examples of some of the most pertinent industry developments that have taken place in the past year in the rubber industry. The future of this industry lies in developing solutions in the wake of global warming and climate anomalies that are sweeping the planet and pose a serious threat to agricultural activities across the globe.

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