The 5 Biggest Challenges for Companies in the Rubber Industry – by José Quintino, Chief Sales Officer at Ruy de Lacerda

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The 5 Biggest Challenges for Companies in the Rubber Industry, by José Quintino , Chief Sales Officer at Ruy de Lacerda

The rubber industry is vital for many applications, from tyre production to industrial components and medical products. However, companies operating in this sector face a number of complex challenges, which require effective strategies to maintain competitiveness and sustainability.

The European Union consumed 1.23 million tonnes of natural rubber in 2017, according to the International Rubber Study Group, and it has been defined as an essential raw material in the EU.

Below, we explore the five biggest challenges affecting companies in the rubber industry.

 

Sustainability and Environmental Impact

The pressure for sustainable practices is one of the biggest concerns for the rubber industry. The production of synthetic rubber, which relies on oil derivatives, and the recycling of rubber products, such as used tyres, pose significant environmental challenges.

Companies need to invest in greener technologies and explore sustainable alternatives, such as natural rubber and recycled materials, to meet the growing demand for eco-friendly practices. In addition, reducing carbon emissions and consumption of natural resources are essential goals to align with environmental regulations and consumer expectations.

Implementing these practices is a significant challenge for companies, as the rubber tree is included in the European Union’s Deforestation Regulation (EUDR), which aims to combat climate change and deforestation, requiring companies to ensure that their raw materials come from areas not affected by deforestation problems.

 

Raw Material Price Volatility

The rubber industry is highly dependent on raw materials such as natural rubber and oil derivatives, both of which are subject to price fluctuations on the global market. Adverse weather conditions can affect the production of natural rubber, while geopolitical tensions and fluctuations in the price of oil directly impact the cost of synthetic rubber. This volatility can affect companies’ profit margins and financial stability, making careful planning and risk mitigation strategies necessary.

Europe is 100% dependent on imports of natural rubber, namely for the production of commodities such as tyres, so political instability or climate disasters in natural rubber producing countries, namely Southeast Asia, have a major impact on raw material prices.

 

Innovation and Competitiveness

The need for innovation is constant in the rubber industry. With the advance of technologies and the demand for high-performance products, companies are challenged to develop new rubber compounds with improved properties, such as greater durability, heat resistance and lower weight. Innovation not only helps differentiate products on the market, but is also crucial to meeting the specific needs of sectors such as automotive, aerospace and healthcare. However, developing new products and processes can be costly and time-consuming, requiring continuous investment in research and development.

 

Strict regulations

Regulations surrounding the production and use of rubber are becoming increasingly stringent. These include environmental, health and safety standards, which require companies to reduce the use of certain chemicals and improve waste management processes. In addition, compliance with specific regulations in markets such as the European Union can be complex and time-consuming, requiring constant adjustments to operations and products.

As mentioned in the section on sustainability, the rubber tree is included in the EUDR, so companies that develop and produce rubber products have an obligation to ensure that their raw materials come from sustainable sources and have not caused deforestation. Regulations on recycling and carbon emissions also strongly affect companies in this sector.

 

Waste Management and Recycling

Waste management is a significant challenge for the rubber industry, especially due to the difficulty of recycling vulcanised rubber, such as that used in tyres. Recycling rubber requires complex and expensive processes, and existing solutions are still limited in terms of efficiency and economic viability. With growing pressure to reduce the amount of waste sent to landfill and to increase the reuse of materials, companies are incentivised to invest in advanced recycling technologies and to find new methods for turning rubber waste into useful products. Identifying and acquiring the solutions to these problems is challenging and requires extensive market knowledge and contact with various suppliers, advantages that Ruy de Lacerda has thanks to our extensive network of contacts and experience in the market.

 

Conclusion

The challenges facing the rubber industry are complex, requiring companies to adopt strategic and innovative approaches to stay competitive. Sustainability, raw material management, innovation, regulatory compliance and recycling are critical areas that require constant attention. By tackling these challenges with creative and sustainable solutions, companies can not only overcome difficulties, but also thrive in an ever-evolving global market.

At Ruy de Lacerda we are always on the lookout and ready to support Portuguese industries in facing these challenges, with our technical know-how, adaptability and the support of our extensive network of partners.