ERJ: Review of the year

London – As 2022 draws to a close, ERJ looks back on a year which, after a promising start, brought some of the most serious challenges ever faced by the rubber & tire industry.

Cautious optimism prevailed in the early months of 2022 with markets in clear recovery mode, helped by an easing of Covid measures across the world, bar southeast Asia.

Pent-up demand drove up sales in both tire and non-tire segments globally, as the industry adjusted to post-pandemic issues, including those around materials supply and logistics.

The positivity, however, was suddenly dissipated as the Putin regime's war on Ukraine, started on 24 Feb, led to global sanctions on Russia.

Among the most immediate impacts, were shortages of key raw materials, particularly carbon black imports from Russia, and moves by major European tire makers to exit the country. 

ERJ’s Ukraine Crisis Tracker was one of the most-read reports during the year, offering updates on company decisions particularly over the first three months of the military invasion.  

Most significantly, the war led to the permanent exit of tire makers Nokian and Michelin and other rubber players from Russia – with the Finnish group now building a €650-million greenfield plant in Romania to replace lost capacity.

The war in Ukraine also brought about indirect pressures such as an unprecedented energy crisis that hit economies and industry across Europe, particularly in Germany. 

However, companies in the European rubber & tire industry have managed to adjust to the challenges and operate more-or-less as normal. 

In the M&A arena, Trelleborg completed two of the biggest deals of the year: its €1bn acquisition of Minnesota Rubber & Plastics and ongoing €2.1bn sale of its TWS tire/wheels business to Yokohama Rubber.

Elsewhere, ChemChina-owned Aeolus Tyre gained full control of Prometeon Tyre Group with a 38% acquisition of shares in the Italy-based commercial tire manufacturer.

When it came to greenfield projects, Serbia was at the centre of attention with both Toyo and Linglong starting up tire manufacturing plants in the country. 

Industry efforts towards sustainability gained further momentum as picked up by ERJ’s Elastomers for Sustainability programme to identify projects that will significantly raise the environmental performance of the rubber industry.

Marketwise, the tire sector this year saw a potential trend-reversal in OE demand, following an almost two-year slowdown in automotive vehicle production due to microchip shortages. 

However, the outlook for 2023 in the tire industry remains challenging, with the ETRMA warning of a potentially difficult year ahead if inflationary and supply tensions persist.

Similarly, the rubber gloves industry has seen a sharp decline, with Malaysian manufacturers, including world number 1 Top Glove, reporting earnings declines of over 90% amid oversupply and lower average selling prices.

Looking ahead to 2023, ERJ will be focusing on global economic trends and the likely impact of geopolitical developments on demand for tire and rubbers products and the cost and availability of the materials and energy used to produce them.