CUYAHOGA FALLS, Ohio—When it comes to the supply of natural rubber, Bill Hyde is more concerned about five years down the road than five months from now.
That's because while there is current disarray in the market and difficulty in obtaining materials, those issues are caused more by logistics than actual supply and demand issues, according to the IHS Markit executive director of C4 olefins, natural and synthetic rubber, and tire raw materials.
Hyde said it never ceases to amaze how much the natural rubber industry is built on the backs of NR tappers who go out every day, tap the trees and send the material to processing plants.
"The world's NR industry—for today and at least for the foreseeable future—is really dependent on small farmers working small fields, an average of 1.5 hectares," he said in a virtual presentation during the recent Rubber in Automotive Conference, organized by Rubber & Plastics News.
That method of filling the natural rubber pipeline was prevalent throughout Southeast Asia, at least until COVID-19 hit, and all of the sudden there wasn't enough labor to tap the trees. But that wasn't a big deal in 2020 as NR demand fell, China bought a lot of surplus rubber and there were strong inventories available.
But when markets rebounded, there wasn't enough NR in place to meet immediate demand. Hyde said the huge disconnect in containerized shipping wreaked havoc, with empty containers where they weren't needed, none available where they were needed and huge backlogs at ports.
Prices went through the roof, delivery times lengthened, and it was difficult to get the natural rubber from where it was produced in Southeast Asia to where it was consumed in Northeast Asia, Western Europe and North America.
But Hyde sees these problems as temporary, unlike the long-term prospects for NR.