How natural rubber goes from a seedling to a useful part of a tire or other rubber product is a long, difficult process. It's getting more difficult, and for an unusual reason. Container shipping companies unilaterally are breaking contracts to take NR out of Indonesia, the world's second-largest producer of Hevea rubber and biggest supplier to the U.S. The reason: The near-collapse of the Indonesian economy and currency has killed the market for imports in that island nation, and the shippers refuse to send empty container vessels there just to pick up NR.
Fortunately for rubber processors, break-bulk shippers have filled in the gap. Unfortunately, this traditional method of transporting NR shrink-wrapped on wooden pallets is less desirable than stainless-steel containers. The potential for contamination is higher.
That's not good news for rubber processors. Reacting to the demands of their customers, manufacturers are demanding higher quality from their NR suppliers—quality better ensured by container shipping. The NR nations have taken steps to improve the purity of their rubber, but the current situation—at least in Indonesia—is a step backward.
At least the break-bulk carriers are helping to keep NR demand satisfied. The shipping situation doesn't seem to have influenced the price of rubber. Prices remain quite low, largely the result of the weakened Southeast Asian currencies.
The long-term fear for rubber processors about NR is the same as always: that rubber growers decide to abandon a slow-growing product that takes a major commitment in time and effort to see to fruition, and turn to crops that generate a quick yield.
That would cause a shortage, and higher costs, for an ingredient that remains vital to the rubber industry.