Guest Blog Post: Insights from the IISRP Meeting (6/2/09)
There were two interesting keynote speakers. The first was the president of Bridgestone Americas who commented on the dramatic decline in vehicle production and the dampening effects on tire production. He forecasted a gradual recovery over the next two to three years. Of great interest to me were his remarks on the third generation “Run-Flat” tire, which has been engineered to run for 50 miles at 50 mph after losing pressure under normal driving conditions. The key is a new sidewall reinforced synthetic rubber which helps reduce heat generation and sustain performance under adverse conditions. The tire’s construction enables a smooth stop, even on wet pavement, without compromising passenger safety.
(1) Passenger Safety-the ability to avoid having to change a tire in unsafe environments, such as on the shoulder of a busy highway;
(2) Better Utilization of Space-no spare tire means freeing up the trunk space; and
(3) Resource Conservation-not having to dispose of a spare tire and wheel, which are often rarely used and are in good condition.
We also heard from Chemical Market Associates Inc. (CMAI) commenting on its assessment of the global economy and, specifically, the C4 hydrocarbon market. C4’s are precursors to butadiene, a key raw material for synthetic rubbers, which is a byproduct formed in the production of ethylene and other olefins.
On global GDP, CMAI predicts a bottoming out in early Q4 2009 with recovery ultimately leading to “good business” in late 2010 and early 2011. C4’s will remain in tight supply resulting in butadiene suppliers dropping in 2010 and 2011. In terms of excess inventory, North America has been and is a net importer. CMAI forecasts a sharp increase in pricing back up to 2006 levels over the next six to 12 months. There will be no surplus supply in Western Europe through 2013. Asia will see a decline in excess supply in 2010-2011, with the trend not reversing until 2012 or later. Styrene is also expected to show a similar price curve over the coming months.
Do these predictions align with your industry indicators and information? I welcome your thoughts and comments on the information presented above.