Last year was supposed to be the difficult one. This year was supposed to be the beginning of the recovery.
Instead, the natural rubber industry finds itself in the eye of the storm, the relative calm between bouts of strong headwinds and heavy rains, bracing for more uncertainty and upheaval in the years ahead.
That's not to say that NR hasn't faced its share of challenges in recent years. Mercurial pricing and climate implications have weighed heavily on smallholders, who produce around 85 percent of the world's natural rubber. And these root issues, which caused fissures in the foundation of the industry, were exacerbated with the COVID-19 pandemic.
Global measures intended to curb the spread of COVID-19 led to production slowdowns and stoppages, dramatically reducing demand for NR and causing prices to plummet.
As industries—particularly automotive and tire—came back online, NR demand rebounded.
But supply? Supply is dwindling. Especially as flooding and tree disease continue to cause loss of product.
"(I'm) worried about supply," Ryan Wiener, global head of sustainable development and strategic marketing for Corrie MacColl Ltd., said in an email interview. "Years of low prices have allowed demand to outpace growth in supply, and it's time the world realizes that the material, which is so vital in powering humanity's mobility, is scarce."
Securing NR not only is getting harder, it's getting more expensive. Supply chain bottlenecks caused by poorly placed shipping containers, trade imbalances and unusually high global demand for personal protective equipment, have left suppliers fighting for cargo space.
Tor Hough, CEO of Rochester, Mich.-based Elm Analytics L.L.C., said the costs to transport goods and materials have increased tremendously since the pandemic began. But natural rubber, in particular, is feeling the squeeze. What typically may cost $2,000 a ton to ship now may cost as much as $5,000 or $6,000 per ton, he said.
Hough keeps a close eye on the whole of the automotive supply chain, watching for early signs of potential disruption in an effort to give OEM clients the flexibility to respond early and adjust deftly when problems arise.