Global rubber consumption, which has increased at a CAGR of over 2% in the last two years, is expected to accelerate in the next 5 to 10 years due to rising demand for tire and other rubber goods driving rubber process oil (RPO) demand. The global RPO market in 2013 is estimated close to 3 million tons according to the recently published Global Rubber Process Oils: Market Analysis and Opportunities by global consulting and research firm Kline & Company. “While the differences between regions in terms of growth rates and product consumption will persist in the future,” comments Kunal Mahajan, Energy/Petroleum Practice Project Manager, “with more countries adopting regulations for environmental RPOs and tire labeling, most markets are expected to converge into a global one in terms of types of products used. Additionally, growing tire demand and tire production facilities migrating to emerging economies, mainly in Asia, will result in RPO demand increasing more rapidly in emerging countries than developed countries.” In terms of product segments, aromatics comprising DAE, TDAE, RAE, TRAE, and MES are the largest product segment, accounting for close to 57% of the total demand. Aromatics are followed by naphthenic and paraffinic RPOs at 29% and 14% of the total demand, respectively. Aromatics are the most compatible RPOs with rubber and rubber products, mainly tires, due to which its consumption share is high. Naphthenic RPOs are mainly consumed in North America, accounting for 70% of the total RPO demand in the region, due to ample local supply. The United States and China are the largest RPO markets in the world, followed by Japan, India, South Korea, and Germany. Indonesia, Thailand, Russia, Turkey, and France form the next tier, followed by Malaysia, Poland, and Italy. Together, the 14 countries studied in the report account for more than 80% of the global RPO demand. In most countries, the industry is dominated by local suppliers, with a few exceptions including a single EU market and few countries in Asia. However, even in these markets, local players have a significant presence, allowing local dynamics to affect the market to a large extent. Tire companies also prefer local suppliers to ensure a secure supply and prioritize RPOs available locally. As global tire companies increase their presence in emerging economies, they are expected to follow similar global standards. H&R and Nynas already have a significant presence in Asia and Eastern Europe; moreover, Ergon is also increasing its presence in the regions. As competition increases, local RPO suppliers and tire companies may adopt some of the practices of their global peers, leading to integration of the market. There are two key regulatory factors influencing the market. The regulation banning DAE’s usage adopted in the EU and followed by other countries virtually eliminated the usage of DAE in the EU and adversely affected demand in other countries that export tire products to the EU. Secondly, tire labeling legislation was first implemented in the European Union to improve safety, fuel economy, and reduce noise pollution. This regulation mandates tire producers to display the fuel efficiency of tires on their product labels. S-SBR tires achieve the best fuel efficiency, and therefore its demand is expected to rise in the coming years as the trend towards tire labeling spreads globally. Kline estimates that the global RPO market will grow at a CAGR of around 2.5% during 2013-2023, led by Asia, which is expected to grow at a CAGR of 3.7%, the highest in the world. Against this backdrop, Global Rubber Process Oils: Market Analysis and Opportunities explores market opportunities for rubber process oils.
