Bio Rubber Process Oil to Grow Three Times Faster than the Global RPO Demand
PARSIPPANY, NJ – April 9, 2019 – The global rubber consumption is expected to slow down in the next five to 10 years due to slower tire demand. Since tires are the major consumer of rubber and rubber process oil (RPO), the demand for RPO is expected to grow slower during this period. Furthermore, there is an emerging trend to use less RPO to produce lighter tires. However, demand for other rubber goods, such as shoes, toys, tubes, hoses, and belts, among others, is expected to grow and drive growth in the RPO market, which is estimated at close to 3.3 million tons globally in 2018, according to Kline’s Global Rubber Process Oils: Market Analysis and Opportunities. To learn key insights from this dynamic market, REGISTER FOR OUR WEBINAR.
In terms of product segments, aromatics comprising DAE, TDAE, RAE, TRAE, and MES are the largest product segment, accounting for close to 52% of total demand. Aromatics are followed by naphthenic and paraffinic RPOs. Since 2013, aromatics have lost about 5% market share as tire and other rubber goods manufacturers look for alternatives mainly due to a ban on DAE in the European Union.
Other regions, such as Asia, are also moving to “greener oil” with less polycyclic aromatic hydrocarbon (PAH). TDAE is the best available alternative for DAE, but it is expensive and is dedicated to passenger car tires. RAE, with poorer performance, is preferred in truck tires and conveyor belts. Consequently, rubber goods manufacturers are increasingly adopting paraffinic and naphthenic RPOs. Naphthenic RPOs are a good substitute for TDAE and RAE, as they offer solid performance and availability. Naphthenic suppliers have included a 5%-6% bio content to formulations to improve polarity.
The United States and China are the largest RPO markets in the world, followed by India, Japan, South Korea, and Germany. The 15 countries studied in the report account for more than 75% of global RPO demand.
Local suppliers dominate in most markets with an exception of the single EU market and some Asian countries. However, even in these markets, local players have a significant presence. Hence, local dynamics affect the market to a large extent. Tire companies also prefer local suppliers to ensure secured supply and prioritize RPOs available locally.
“We see two emerging trends in the market,” comments Kunal Mahajan, the report’s project manager. “The demand for bio RPOs is expected to rapidly grow, albeit from the small base, as tire companies increasingly aim to meet their sustainability goals. Kline estimates the market for bio RPOs to grow at a CAGR of more than 5%, almost three times higher than the growth of global RPO demand. Secondly, the RPO market is slowly integrating into a global market.”
The RPO market is a regional market, with different a product mix and dynamics in each region. For example, the United States is primarily a naphthenic and paraffinic RPO market, while Asia and Europe are mainly aromatic markets. TDAE became the leading RPO in Europe, while DAE remained the leading RPO in Asia. This situation is expected to change, as some countries may issue regulations similar to the European Union on DAE, favoring lower PAH oils. This could reduce the distortion in the market; however, the impact will be limited as the two leading Asian markets for DAE – China and India – do not plan any regulations banning or restricting DAE. Moreover, with declining Group I basestocks demand, the availability of aromatics RPOs may reduce driving demand for naphthenic and paraffinic RPOs.
Kline estimates the global RPO market to grow at a CAGR of around 1.8% during 2018-2028. Against this backdrop, Global Rubber Process Oils: Market Analysis and Opportunities explores market opportunities for this market.
Kline is a worldwide consulting and research firm that has been serving the management, consulting, and market research needs of organizations in the agrochemicals, chemicals, materials, energy, life sciences, and consumer products industries for 60 years. For more information, visit www.Klinegroup.com.