HOUSTON—All eyes are on China—from both a growth and raw materials standpoint.
Rubber companies, both manufacturers and suppliers, can expect to be impacted by the swings in the market in the country, according to Bill Hyde, director of C4 Olefins and Elastomers for Chemical Market Associates Inc.
On the raw material front, he said markets for natural and synthetic rubber are closely tied to what happens in China. The first half of 2013 looks fairly stable in terms of pricing, but the second half will depend on fluctuations in China's market.
Overall, Hyde expects some movement on raw material pricing as the year progresses. Costs probably will increase gradually throughout the year, “but not a lot.”
Butadiene prices are relatively stable and are expected to remain that way in the first half, he said. Feedstock availability probably will be unchanged from 2012.
However, he said, if demand for finished goods should rise significantly, which at present he doesn't anticipate, “then you could see some price volatility pretty quickly.”
Hyde does not think there will be a significant increase in butadiene and other feedstock production capacities in the U.S. this year, but he anticipates there will be output boosts in Europe and China.
By most standards, China should experience solid gains in its markets, he said. The executive at Houston-based CMAI anticipates China will grow at a rate of about 8 percent in 2013, “but that's not the rate they want.”
Instead, government officials in the country are aiming for at least a 10-percent jump, Hyde said, and have come up with stimulus packages to coax the nation's economy upward. Despite those incentives, it still looks like China's growth will stay in the 8-percent range, he said.
Most other countries would be happy with that kind of improvement. But unfortunately, that's not likely to happen.
For example, Hyde anticipates countries across Europe will continue to experience difficulties. In fact, it's not likely to be much different than what oc¬¬curred in 2012 when the economy was stagnant across the continent.
The U.S. should see some growth, he said, “but at disappointing rates because it still has tremendous headwinds from a public policy standpoint.”
He cited growing government regulations and unresolved political issues, which he said have caused uncertainty with what's going to happen at the federal and state levels. There was soft demand for products in 2012 and he doesn't see that changing in 2013.
“That, in turn, delays the hiring process,” according to Hyde.
On a positive note, CMAI is optimistic about growth in the automotive and housing markets, but the replacement tire segment could be disappointing, as it was last year. “Overall, the market is still weak in terms of historical performance,” he said.