No rubber industry association has a more-inclusive membership or more global focus than the International Institute of Synthetic Rubber Producers. Nearly all the world's manufacturers of SR are members of the Houston-based organization.
As head of the IISRP, James L. McGraw is in a unique position as a participant in and observer of the world's SR business. The IISRP managing director and CEO has served as head of the organization since 2000, after spending three years as deputy managing director. Before that he served on IISRP committees for 20 years while working for American Synthetic Rubber Corp.
In the following story, McGraw gives his view of issues affecting the synthetic rubber industry and the IISRP, in response to questions by Edward Noga, Rubber & Plastics News editor.
How is the collaboration with the International Rubber Study Group on obtaining synthetic rubber forecasts working out?
The collaboration is going fine. We provided historical consumption data and capacity information to the IRSG, they ran their model and we are now reviewing a draft forecast. I am pleased with our close cooperation with the IRSG.
How many synthetic rubber companies in the world aren't members of the IISRP? Is there an effort being made to bring them into the institute?
We have about 90 percent of the global capacity as members. Most of the non-members are relatively small and supply domestic markets, and it is a stretch for them to financially support membership.
There are a few producers in Central Europe and we are pursuing them, and also a few in Asia that we are actively exploring membership. In fact, Dr. Leon Loh, our senior director of programs, met recently with a potential Chinese member. We have another potential member coming to the (IISRP Annual General Meeting in Barcelona, Spain, May 15-18) as an observer.
Our major objective is to get Lanxess to rejoin and I am optimistic this will happen later this year.
Do you think a predicted shortage of natural rubber will offer opportunities to synthetic rubbers in the future, as a substitute for NR?
There are many applications where SR and NR compete and when NR gets tight and/or the price gets too high, there will be substitution. This is good for the SR industry to say the least.
I do have a concern, however. In five to eight years, all of the newly planted rubber plantations will start to yield, leading to overcapacity of NR with falling prices, and that will negatively impact SR.
Certain synthetic rubbers are in short supply in the U.S., or at least that's the perception: neoprene and polyisoprene, in particular. Do you think more capacity for these rubbers will be added, or is that just not practical?
I do not foresee any new CR or polyisoprene capacity additions in the near future, and I can not say there is a real shortage. It is tight. The number of producers are limited and perhaps that in itself is troubling to the downstream industry.
China is the 500-pound gorilla in the rubber business, in just about all aspects, from materials and chemicals to finished products. Since China's demand for resources isn't going away (and India is right behind), do you think supply might get tighter for some SRs, and pricing higher, in the future?
China is adding capacity to meet their demand and in fact they are the only country where new plants are under construction and/or existing plants expanding. They will most likely be in a position to meet their demand.
In addition, IPCL (Indian Petrochemicals Ltd.) in Mumbai (India) is planning on building an emulsion styrene-butadiene rubber plant to satisfy the Indian demand.
Do international trade agreements, like NAFTA, have a beneficial effect on the synthetic rubber industry?
I personally do not like trade barriers and in my opinion any bilateral agreements promoting free trade is good for business and ultimately the consumer. Having said that, NAFTA was welcomed by some of my members but unwelcome by others.
Do you see thermoplastic elastomers continuing to gain ground as a replacement for some rubbers? Or is its growth slowing or bound to slow in the future?
I believe TPEs will continue to grow and its consumption will be at the expense of other elastomers. The growth rate will be much higher in China, which should not be a surprise to anyone.
What's the No. 1 environmental issue facing the synthetic rubber industry today? What is the IISRP doing in regards to that or other environmental and safety issues?
The IISRP and its member companies fostered product stewardship before the term became popular. We initiated scientific research on butadiene in the mid-1970s which, by the way, continues today.
Just last September we, along with our partners, conducted a scientific symposium on the health effects of butadiene and chloroprene. We had more than 40 scientists to present research that had taken place since our last symposium in year 2000.
All of this is to learn more on the health effects to provide for a safer workplace and a safer community where the plants are located.
Down the road we will see more regulatory efforts on tighter emission controls in all of the geographic regions. The U.S. Environmental Protection Agency is poised with its next round of emission reductions, and in Europe and Japan, there have been similar efforts. Some companies are forging ahead on their own to reduce emissions.
The regulatory initiative in Europe called REACH will be a challenge and we have a speaker on this topic for the Barcelona meeting.
Do you believe feedstock costs finally are stabilizing?
Feedstocks did stabilize, but that was when oil was hovering at $60-62 per barrel. But now with oil at $70-plus, I would not be a bit surprised to see feedstocks take off again. Hopefully the SR producers will be able to pass these through.
You've been in the synthetic rubber business for quite awhile now. In your opinion, what are the biggest differences in the business today compared with your days at ASRC? What challenges do you see in the future for the business?
The IISRP is in itself a community and it is this sense of community that has made us who we are. We were formed in 1960 by 14 members with a vision and I would hope that we have lived up to that vision.
I became involved with the IISRP in the late 1970s and was a very active player because it was the way for a smaller member company to leverage its limited resources. We at ASRC did not have access to toxicologists nor epidemiologists and through the membership we had access to knowledge and experience.
There was a high degree of volunteerism from all members. It is still there today but not as robust as I prefer. People have far too many hats to wear these days and their plates are running over.
We are a service organization and it is imperative for us to provide valued programs and services to the membership. We have excelled in this for almost 50 years and we will continue for another 50.