Forecasting market supply and demand is a difficult proposition, as evidenced by two forecasts given during the International Tire Exhibition & Conference Virtual Edition.
Both were offered by industry veterans, and given this pandemic-plagued year, each knew that they needed to put forth more than the normal number of disclaimers in their projections.
Jeff Schuster of LMC Automotive said he has been pleased with how auto sales have bounced back since the April-May time period. Still, he expects light vehicle sales to hit only 13.5 million to 13.9 million units, below the 17 million that has become the recent norm.
He looks for sales to grow steadily the next few years, topping 15 million next year but not coming close to 17 million again until 2024. But his prognostication came with this important caveat: the continued strength of the market this year and growth into 2021 is predicated on the assumption that there will be a second stimulus package in the U.S.
And with today's political uncertainty, that's no given.
Bill Hyde watches the synthetic and natural rubber sectors for IHS Markit, which he said expects a significant bounce back in GDP growth for the world's major regions next year. But the optimistic forecast is predicated on two major uncertainties: that there is no major pullback because of COVID-19 the rest of this year and that a viable vaccine is ready for use in early 2021.
He also gave insight into the interconnectivity of materials that are used to produce synthetic rubber. For example, what happens with ethylene impacts butadiene and styrene, two of the main key monomers for SR that are byproducts of ethylene production.
And China's efforts to become self-sufficient in ethylene and butadiene will cause a fallout for the rest of the geographic regions involved in the SR supply chain, setting up a scenario for winners and losers going forward.
At least the fact that China plans to dominate these feedstock markets even further needed no disclaimers.